Brad earns $250 a week working as a student aid. When he cashes his check he takes $100 to the cashiers office to pay part of his tuition. $25 goes to paying off his books, $75 goes for entertainment and $50 he keeps for unexpected expenditures. Which of the following statements is TRUE?
A. The transactions demand for money is $200, the precautionary demand is $50 and the asset demand is $0.
B. The transactions demand for money is $125, the precautionary demand is $75 and the asset demand is $50.
C. The transactions demand for money is $250, the precautionary demand is $0 and the asset demand is $0.
D. The transactions demand for money is $0, the precautionary demand is $250 and the asset demand is $0.
Answer: A
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In the early 1980s, many savings-and-loan associations pretended to be solvent by
A) valuing their assets on a historical cost basis. B) underreporting the amount of their liabilities. C) including the impact of high interest rates on the value of their assets. D) counting "goodwill" as an asset.
How much labor does a firm require to produce q = 1000 when capital is fixed at 5 and they have a production function equal to q = 200L0.5K0.5?
A) L = 5 B) L = 2.5 C) L = 200 D) L = 2.25
Ten cases of spring water are sold for $6 each, and the marginal product of the last unit of labor is 5 . If the price of a case increases from $6 to $8, then the marginal revenue product of the last unit of labor would
a. decrease by $10. b. increase by $40. c. decrease by $30. d. increase by $10. e. not change.
Economists assume that individuals make informed decisions and act in their own self-interest.
Answer the following statement true (T) or false (F)