Refer to the following graph.
The maximum amount of good A can be consumed in this economy without trade is
A. F units.
B. G units.
C. Q units.
D. P units.
Answer: C
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What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?
What will be an ideal response?
______ is a fixed-weight index that is based on a consumption bundle actually purchased in the base year.
A. A Lespeyres price index B. Compensating variation C. Real income D. The inflation rate
If the marginal propensity to save is 0.3, the size of the multiplier is:
A. 0.7. B. 3.3. C. 1.3. D. 2.3.
When Jeff bought a house he also bought homeowners insurance, but when he bought a new dishwasher he refused to buy the repair insurance policy the store offered. Assuming Jeff is rational in his choices, which of the following is the most likely cause of his behavior?
A. The expected loss from dishwasher failure is less than the insurance premium and he can afford to absorb smaller losses. B. The probability of his house burning is greater than the probability a dishwasher failure. C. He switches back and forth between risk averse and risk loving preferences. D. He doesn't trust appliance insurers because they have no agent to relate to.