For an individual consumer, a corner solution may be optimal such that MRS and MRT are not equal, A) but this is not possible in an Edgeworth Box due to the transitivity of preferences. B) but this is not possible in an Edgeworth Box because price ratios must be positive. C) and this may also […]
Date: September 9th, 2020
Under what circumstances will the economic rent earned by a factor of production always be zero? A) Infinitely inelastic supply curve B) Infinitely elastic supply curve C) Somewhat inelastic supply curve D) Elastic demand curve ANSWER B
Date: September 9th, 2020
Use the data in the table below to answer the following questions about a firm. Units of Units of Total Marginal Output Input X Input Y Product Product of X Price 0 25 0 $10 1 25 2 10 2 25 7 10 3 25 14 10 4 25 20 10 5 25 23 10 […]
Date: September 9th, 2020
The statement: “If everyone trades in the competitive marketplace, all mutually beneficial trades will be completed, and the resulting equilibrium allocation of resources will be economically efficient.” is formally known as: A) the law of supply and demand. B) the first theorem of supply and demand. C) the first theorem of welfare economics. D) the […]
Date: September 9th, 2020
Consider the demand curve of the form Q = a – bP. If a is a positive real number, and b = 0, then demand is A) completely inelastic. B) inelastic, but not completely. C) unit elastic. D) elastic, but not infinitely. ANSWER A
Date: September 9th, 2020
What is the economies of scope character for a firm that has a straight-line product transformation curve? A) Economies of scope (SC > 0) B) Diseconomies of scope (SC < 0) C) SC = 0 D) SC = 1 ANSWER C
Date: September 9th, 2020
Which of the following is true concerning the income effect of a decrease in price? A) It will lead to an increase in consumption only for a normal good. B) It always will lead to an increase in consumption. C) It will lead to an increase in consumption only for an inferior good. D) It […]
Date: September 9th, 2020
Trisha’s Fashion Boutique sells earrings and pendants. Trisha has two types of customers. Their willingness-to-pay for earrings and pendants are given in the table below. If Trisha bundles the earrings and pendants together, could she increase revenue? Earrings Pendant Type I 100 65 Type II 90 75 ANSWER If Trisha bundles the products together […]
Date: September 9th, 2020
The indifference curves of two investors are plotted against a single budget line. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B’s tangency to the same line. A) Investors A and B will hold the same portfolio. B) Investors A and B will […]
Date: September 9th, 2020
When the federal government installs a price support program that requires the government to purchase all of a good not bought in the private economy at the support price, the impact on total welfare is the A) change in consumer surplus. B) change in consumer surplus + the change in producer surplus + the cost […]
Date: September 9th, 2020
