Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 40 units of clothing but no food. Suppose each has the utility function U = F ? C. The price of clothing is always $1
What is the competitive equilibrium price for food? A) $5
B) $4
C) $3
D) $2
B
You might also like to view...
A financing gap is:
A. the difference between the savings rate within an economy and the amount of investment needed to achieve sustainable growth. B. the extra savings a country has beyond that needed to achieve sustainable growth. C. the difference in the amount of investment dollars coming in to a country and the amount of investment dollars going out of a country. D. the extra investment developing countries need in foreign aid to sustain their current rate of growth.
If the nominal interest rate is 8 percent and the real interest rate is 5.5 percent, then the inflation rate is
a. -2.5 percent. b. 0.45 percent. c. 2.5 percent. d. 13.5 percent.
To ensure quality, piece-rate plans must usually be accompanied by:
A. time clocks. B. profit-sharing plans. C. spot checks. D. quality control mechanisms.
The quantity of investment demanded by firms
A. is unrelated to the interest rate. B. is directly related to the interest rate. C. is positively related to the level of uncertainty. D. is inversely related to the interest rate.