When a person is risk-preferring, his indifference curves are
a. convex.
b. concave.
c. linear.
d. upward sloping.
b. concave.
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You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:
A. borrow the book from the library because you can get it from the library for free. B. borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13. C. buy the book online because it takes less time. D. borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is greater than $13.
According to the graph shown, if this economy were to open to trade, domestic producers would:
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
A. transfer surplus in area BC to consumers.
B. transfer surplus in area BCD to foreign producers.
C. lose surplus in area BCD to foreign consumers.
D. receive additional surplus of BCD.
According to the second welfare theorem
A. equity cannot be analyzed in the Edgeworth box model because it shows only possible trades toward efficiency. B. the welfare of individuals is not based on material goods. C. the issues of equity and efficiency are separate in that the system can be on the contract curve but might not be considered equitable. D. when an allocation is efficient it also achieves equity.
If more of an input factor is used, while holding other inputs constant, a firm will eventually experience:
A. Diminishing returns. B. Falling marginal cost. C. Rising marginal physical product. D. Rising consumer demand.