Behavioral economists have discovered that A) transitivity of preferences always holds, even in animals. B) the law of demand does not hold in controlled experiments. C) transitivity of preferences does not always hold, especially for young people. D) reflexivity of preferences is not true. ANSWER C
Date: September 9th, 2020
An increase in the price of a good causes A) a change in the slope of the budget line. B) an increase in the consumption of that good. C) a rightward shift of the demand curve for that good. D) a parallel rightward shift of the budget line. ANSWER A
Date: September 9th, 2020
In Spain, people are considered organ donors unless the explicitly indicate they do not want to be. In the United States, people are only considered organ donors if they explicitly indicate they wish to be. Behavioral economics would suggest that A) everything else equal, the opt-in system of Spain would generate more organ donors as […]
Date: September 9th, 2020
Cash may be preferred to food stamps because additional cash A) rotates the budget constraint. B) shifts out the budget constraint at every point. C) provides a smaller opportunity set. D) allows the purchase of more food. ANSWER B
Date: September 9th, 2020
People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4. The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the […]
Date: September 9th, 2020
Those who criticize individuals who choose to drive a relatively inefficient sport utility vehicle (SUV) might mistakenly A) assume everyone faces the same relative prices. B) assume everyone has the same preference set. C) assume everyone has the same budget constraint. D) All of the above. ANSWER D
Date: September 9th, 2020
Robinson Crusoe is stranded on an island. He finds that coconuts are freely available (zero harvest cost), but fish are difficult to harvest and require a lot of energy. As a result, harvesting fish has a high price. If coconuts and fish are imperfect substitutes, what is Robinson Crusoe likely to consume? A) He will […]
Date: September 9th, 2020
Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If Max is currently at point d, A) the absolute value of his MRS is larger than the trade-off offered by the market. B) he is willing to give up more chicken than he […]
Date: September 9th, 2020
What is one reason a gift card might be less desirable than cash? A) A gift card requires an individual to purchase from a particular store, which restricts the choice set. B) Cash requires an individual to purchase from a particular country, which restricts the choice set. C) Cash and the gift card are equally […]
Date: September 9th, 2020
If the food stamp program in the United States moved from coupons redeemable for food to cash payments, A) everyone would buy less food and more of other goods. B) everyone would buy more food and less of other goods. C) some people might buy less food and obtain a higher level of utility. D) […]
Date: September 9th, 2020
