The elasticity of demand for fish is estimated to be 3. If this estimate is accurate, then a 3% rise in price will
A. increase quantity demanded by 1%.
B. increase quantity demanded by 9%.
C. decrease quantity demanded by 9%
D. decrease quantity demanded by 3%.
C. decrease quantity demanded by 9%
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Asarta Inc. is polluting into a nearby fishing; doing so benefits them $40,000 a year. The fishermen are unhappy as their trout are dying off. Typically, the fishermen can catch trout and sell it to a local market where they can earn about $8,000 a year. Currently, the fishermen have the rights to use the stream as they see fit. Which of the following is an optimal solution according to the Coase Theorem?
A. Asarta Inc. could pay the fishermen $8,500 and keep polluting B. There is no optimal solution given the current property rights C. The fishermen could pay Asarta Inc. $4,000 to stop them from polluting D. Asarta Inc. could pay the fishermen $7,000 and keep polluting
Use the following graph, which shows the market for euros, to answer the next question.
Assume the United States and European governments adopt a system of flexible exchange rates. If currency traders think the European economy will experience a recession and the U.S. economy will not, this will most likely cause ________.
A. the euro to depreciate B. the U.S. dollar to depreciate C. the supply of euros to decrease D. the euro to appreciate
The riskier the bond, the ________ the discount rate and the ________ the price of the bond.
A) lower; lower B) lower; higher C) higher; lower D) higher; higher
The winner's curse is more likely
a. when there is only one bidder b. when demand for the good being auctioned is increasing c. when the value of the good being auctioned is common knowledge d. when the value of the good being auctioned is uncertain e. when the marginal cost of information is low