Answer the following statement(s) true (T) or false (F)
1. A doubling of all prices has the same effect on the budget line as reducing income by half.
2. If the consumer's income doubles, then his optimal purchases of all goods will double.
3. If the consumer's income and all prices simultaneously triple, then his optimum will not change.
4. The slope of the budget line always equals the consumer's marginal value.
5. The budget line illustrates the consumer's opportunities and the indifference curve illustrates the consumer's preference.
1. True
2. False
3. True
4. False
5. True
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Under rate of return regulation, a regulated firm has an incentive to
A) use an efficient amount of capital. B) set its price equal to its marginal cost. C) hide losses from bad debts. D) inflate its costs.
If in the long run a firm makes zero profit, it should exit the industry
Indicate whether the statement is true or false
Under the gold standard, if the demand for U.S. goods increased, which of the following would happen?
A) Gold would flow into the United States. B) The U.S. monetary base would decline. C) Prices in the United States would fall. D) The United States would experience a balance of trade deficit.
A shortage of textbooks will cause
a. a decrease in the supply of textbooks b. a decrease in the demand for textbooks c. both an increase in the supply of textbooks and a decrease in the demand for textbooks d. an increase in the price of textbooks, caused by a shift of either the supply curve or the demand curve e. an increase in the price of textbooks