What are the key properties of indifference curves?
What will be an ideal response?
Indifference curves have a downward slope and are convex to the origin. Also, the utility level is constant along an indifference curve.
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Suppose that the price of a bag of jellybeans is $6, and the price of a bottle of cola is $2. The relative price of cola is
A) 3 bags of jellybeans per bottle of cola. B) 2 bags of jellybeans per bottle of cola. C) 1/3 bag of jellybeans per bottle of cola. D) $2.
When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,
a. buyers of the good will bear most of the burden of the tax. b. sellers of the good will bear most of the burden of the tax. c. buyers and sellers will each bear 50 percent of the burden of the tax. d. the effective price paid by buyers will decrease as a result of the tax.
In this graph, consumption is at the level of 2,500 when disposable income is
A. 0.
B. 1000.
C. 2000.
D. 3000.
One result of adverse selection in the used car market is that few plums (high-quality) are sold.
Answer the following statement true (T) or false (F)