Let P be the price of a good and let I represent consumer income. Which of the following demand functions represents a luxury good with inelastic price response? A) log(Q) = 4 2 log(P) + 2 log(I) B) log(Q) = 4 – 0.5 log(P) + 0.25 log(I) C) log(Q) = 4 – 0.25 log(P) […]
Date: September 9th, 2020
If the moral hazard problem in automobile driving were to be eliminated, the marginal cost of driving would be A) lowered enough to pull the amount of driving back down to the efficient level. B) lowered enough to raise the amount of driving back up to the efficient level. C) raised enough to pull the […]
Date: September 9th, 2020
The MRTS for isoquants in a fixed-proportion production function is: A) zero or one. B) always zero. C) always one. D) zero or undefined. ANSWER D
Date: September 9th, 2020
The latent poor are not included in the official poverty count as poor. Indicate whether the statement is true or false ANSWER T
Date: September 9th, 2020
A “Credible Threat” A) is also called a “tit-for-tat” strategy. B) always set a low price. C) minimizes the return of your opponent. D) is a strategy selection that is in your best interest. E) provides the best return for both players. ANSWER D
Date: September 9th, 2020
What is the relationship between interest rates and bond prices? Explain. What will be an ideal response? ANSWER There is an inverse relationship between bond prices and interest rates. A bond pays a fixed sum of money each year during its life. At a higher interest rate, the present value of the future payments […]
Date: September 9th, 2020
The supply curve for a competitive firm is A) its entire MC curve. B) the upward-sloping portion of its MC curve. C) its MC curve above the minimum point of the AVC curve. D) its MC curve above the minimum point of the ATC curve. E) its MR curve. ANSWER C
Date: September 9th, 2020
Repetition of a game A) yields the same outcome, over and over. B) can result in behavior that is different from what it would be if the game were played only once. C) is not possible. D) makes cooperative games into non-cooperative games. E) is possible only if the payoffs in the matrix change. […]
Date: September 9th, 2020
The market demand curve for denim jeans is Q = 231 – 45 P + 23 I where P is the product price and I is per-capita consumer income. Which of the following statements about this demand function is NOT true? A) Denim jeans are normal goods. B) The price elasticity of demand is -45. […]
Date: September 9th, 2020
Firms that issue callable bonds have the option of repaying the principal to the bond buyers before the stated maturity date for the bonds. Firms may call their bonds before maturity in order to avoid making some of the coupon payments. Should we expect the price of a callable bond to be higher or lower […]
Date: September 9th, 2020
