If two goods are perfect substitutes, then the indifference curves for those two goods would be A) upward sloping and concave to the origin. B) downward sloping and convex to the origin. C) downward sloping and straight. D) L-shaped. ANSWER C
Date: September 9th, 2020
If two bundles are on the same indifference curve, then A) the consumer derives the same level of utility from each. B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. C) no comparison can be made between the two bundles since utility cannot really […]
Date: September 9th, 2020
The statement “There is no accounting for taste” implies A) individuals all have the same preferences. B) individuals all have different cardinal preferences but the same ordinal preferences. C) individuals all have different ordinal preferences but the same cardinal preferences. D) individuals all have different ordinal and cardinal preferences. ANSWER D
Date: September 9th, 2020
Assuming that good “x” is measured on the x-axis and good “y” is measured on the y-axis, if the utility for the two goods “x” and “y” can be measured as U = y, then it can be concluded that A) “x” and “y” are perfect complements. B) “x” is a “bad”. C) the indifference […]
Date: September 9th, 2020
Economists use a preference map to illustrate that A) more is better than less. B) preferences are transitive. C) preferences are complete. D) All of the above. ANSWER D
Date: September 9th, 2020
Indifference curves that are upward-sloping violate A) the assumption of transitivity. B) the assumption of completeness. C) the assumption that more is better. D) none of the assumptions. ANSWER C
Date: September 9th, 2020
Government revenue from an excise tax of a given amount is greater when demand is relatively inelastic than when it is relatively elastic. Indicate whether the statement is true or false ANSWER True . The tax will result in larger quantity sold the more inelastic demand is. Since the tax is on a per […]
Date: September 9th, 2020
Suppose that a specific tax of $3 is imposed on producers of bread. The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P. What is the change in the equilibrium quantity of bread induced by the tax incidence? A) Equilibrium quantity decreased by three units. B) […]
Date: September 9th, 2020
Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state. What will be an ideal response? ANSWER Smuggling of non-taxed cigarettes and on-line buying where taxes don’t apply by some consumers may prevent a price increase for these consumers.
Date: September 9th, 2020
Suppose that an ad valorem tax of 10% is imposed on consumers of butter. The bread market supply is Qs = 10 + P and the bread market demand is Qd = 220-P. What is the consumers’ tax burden? A) Consumers’ tax burden is $3. B) Consumers’ tax burden is $10 C) Consumers’ tax burden […]
Date: September 9th, 2020
