The above figure shows Bobby's indifference map for soda and juice. B1 indicates his original budget line. B2 indicates his budget line resulting from an increase in the price of soda. From the graph, one can conclude that
A) Bobby views soda as an inferior good.
B) Bobby's demand for soda is perfectly inelastic.
C) Bobby views soda as a normal good.
D) the income elasticity of demand for soda is 1.
C
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Suppose the interest rate is 5 percent per year. The present value of $210 to be received one year from today is
A) $200.00. B) $210.00. C) $215.00. D) $220.50.
Market supply is found by
A) horizontally summing each individual producer's average total cost curve. B) vertically summing the relevant part of each individual producer's marginal cost curve. C) horizontally summing the relevant part of each individual producer's marginal cost curve. D) vertically summing each individual producer's average total cost curve.
The policies of the U.S. Federal Reserve probably helped to cause ________
A) the long contraction of the 1870s B) the severe recession of the 1890s C) the recession in 1918-1919 D) all of the above E) none of the above
Properties of long-run competitive equilibrium with free entry include:
A. an equilibrium price equal to the minimum MC. B. firms earning zero profits. C. active firms producing at their maximum scales of production. D. All of these are properties of long-run competitive equilibrium.