Which of the following statements about setting optimal two-part tariffs for many consumers is NOT true?
A) The number of buyers (entrants) declines as the entrance fee (tariff) increases.
B) The profit from the entrance fee (tariff) is a concave function of the tariff because it first increases and then decreases as the tariff increases.
C) The profit from the entrance fee (tariff) is a convex function of the tariff because if first declines and then increases as the tariff increases.
D) The total profits is composed of the profit from the entrance fee (tariff) and from the profit from sales to buyers.
C
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In choice sets, intertemporal budget constraints illustrate consumption trade-offs over time.
Answer the following statement true (T) or false (F)
A price ceiling imposed by the government:
A) can create situations of excess demand. B) is a tax that increases the market price of a good. C) involves pricing a commodity above the market price. D) helps in establishing equilibrium in case of shortage or surplus.
In the above figure, flow B represents households' ________
A) income B) consumption expenditures C) saving D) investment
If the real interest rate is 3% and the inflation rate is 6%, the nominal interest rate is
a. 2% b. 3% c. 9% d. 18%