Suppose the income-consumption curve for goods X and Y is upward sloping. If the price of good Y increases and the income-consumption curve rotates in clockwise fashion, then we know that: A) X and Y are complements. B) X and Y are both inferior goods. C) X and Y are substitutes . D) Y is […]
Date: September 9th, 2020
This year, on advice from your sister, you bought tobacco company stock at $50/share. During the year, you collected an $8 dividend, but due to the company’s losses in medical lawsuits its stock fell to $40/share. At this point, you sell, realizing a A) dividend yield of -16% and a capital loss of 20%. B) […]
Date: September 9th, 2020
Due to externalities generated by home landscaping, its price A) is above the optimal level, and quantity that is below the optimal level. B) is below the optimal level, and quantity that is above the optimal level. C) and quantity traded are both above the optimal level. D) and quantity traded are both below the […]
Date: September 9th, 2020
Two firms, each producing different goods, can achieve a greater output than one firm producing both goods with the same inputs. We can conclude that the production process involves A) diseconomies of scope. B) economies of scale. C) decreasing returns to scale. D) increasing returns to scale. ANSWER A
Date: September 9th, 2020
One way to remove the excess labor supply problem from a minimum wage policy is to have the government hire all unemployed workers at the minimum wage. What is the key drawback of this version of a minimum wage policy? A) The deadweight loss may increase substantially. B) The cost to the government may be […]
Date: September 9th, 2020
Bundling is effective when the demands for the bundled products are ________ and ________ correlated. A) different; negatively B) different; positively C) similar; negatively D) similar; positively E) identical; perfectly ANSWER A
Date: September 9th, 2020
Good A is a normal good. The demand curve for good A: A) slopes downward. B) usually slopes downward, but could slope upward. C) slopes upward. D) usually slopes upward, but could slope downward. ANSWER A
Date: September 9th, 2020
The correlation between an asset’s real rate of return and its risk (as measured by its standard deviation) is usually A) positive. B) strictly linear. C) flat. D) negative. E) chaotic. ANSWER A
Date: September 9th, 2020
A positive externality is shown by a marginal social benefit (MSB) curve that is A) above and to the right of the demand curve for the good that generates it. B) below and to the left of the demand curve for the good that generates it. C) above and to the left of the supply […]
Date: September 9th, 2020
The cross-price elasticity between a pair of complementary goods will be A) positive. B) negative. C) zero. D) positive or zero depending upon the strength of the relationship. ANSWER B
Date: September 9th, 2020
