What form of irrational behavior can cause asset price bubbles? A) People do not based their investment decision on the fundamental value of the asset but only on the belief that the asset price will continue to increase. B) People accidentally buy assets that they did not want, and this drives up the asset price. […]
Date: September 9th, 2020
All points within the utilities possibilities frontier are A) unattainable. B) efficient. C) inefficient. D) profitable. ANSWER C
Date: September 9th, 2020
Refer to Figure 9.6. Including the consumers’ expected tax burden, the total change in welfare from this policy is A) -$6000. B) -$5250. C) -$4500. D) $4500. E) $5250. ANSWER B
Date: September 9th, 2020
Hale’s One Stop and Auto Service competes with Murray’s Gas Mart. The local demand is: Qd = 25 – 10P P = 2.50 – 0.1 Qd. Both firms sell exactly the same quality of gasoline. Thus, if the firms charge a different price, the lower price firm will capture the entire market share. If […]
Date: September 9th, 2020
Under an upward sloping supply curve for land, the economic rents to land ________ as the demand for land shifts rightward. A) decrease B) increase C) remain the same D) We do not have enough information to answer this question. ANSWER B
Date: September 9th, 2020
Suppose the labor market and all output markets are perfectly competitive. When the labor market is in equilibrium, the wage rate will: A) be less than the marginal revenue product of labor. B) equal the marginal revenue product of labor. C) be greater than the marginal revenue product of labor. D) None of the above […]
Date: September 9th, 2020
Which is NOT an advantage of emissions fees over standards? A) Fees can give a firm the incentive to reduce emissions below the standard when new technology allows. B) Fees can reduce the cost of attaining some goal level of emissions when firms all have the same abatement costs. C) Fees can reduce the cost […]
Date: September 9th, 2020
A firm will avoid producing additional emissions whenever the fee is A) less than the MSB. B) greater than the MSB. C) less than the MCA. D) greater than the MCA. E) equal to the distance between MSB and MCA. ANSWER D
Date: September 9th, 2020
The introduction of refrigerators into American homes: A) decreased the magnitude of the short run own price elasticity of demand for raw meat. B) did not affect the short run own price elasticity of demand for raw meat. C) increased the magnitude of the short run own price elasticity of demand for raw meat. D) […]
Date: September 9th, 2020
Suppose the market price for wheat changes, and we move from point A to point B on the wheat demand curve. If the price elasticity of wheat demand was -0.3 at point A and -0.4 at point B, what is a plausible value for the arc elasticity of demand for wheat between points A and […]
Date: September 9th, 2020
