The cost of repositioning an automobile gas tank for greater safety is $11 per vehicle for 12.5 million vehicles. The automobile company places a value on life of $500,000. To justify redesigning the location of the gas tank, the number of deaths expected to occur if the gas tank location is not redesigned would have to be at least:
A. 175.
B. 1.
C. 100.
D. 275.
Answer: D
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Refer to Figure 8.2. Holding other variables constant, an increase in the real wage will result in a
A) movement from point A to point B. B) movement from point B to point A. C) shift from curve S1 to curve S2. D) shift from curve S2 to curve S1.
In the Friedman-Lucas money surprise model, a surprise increase in money supply growth
A) has no effect on inflation. B) increases inflation less than in proportion to the growth rate of the money supply. C) increases inflation in an equal proportion to the growth rate of the money supply. D) increases inflation more than in proportion to the growth rate of the money supply.
The income effect measures how
a. the quantity of a good supplied changes in response to a change in income b. the quantity of a good demanded changes in response to a change in the price of a good, with income constant c. far the budget line shifts due to a change in income d. the quantity of a good demanded changes in response to a change in purchasing power e. income changes when prices change, holding quantities demanded constant
A binding price ceiling causes quantity demanded to be less than quantity supplied
a. True b. False Indicate whether the statement is true or false