Refer to the diagram. Suppose the budget line shifts so that the consumer's equilibrium changes from point A to point B. This means that the:
A. price of Y has increased.
B. price of Y has decreased.
C. price of X has increased.
D. consumer's money income has increased.
B. price of Y has decreased.
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The principal-agent problem means that managers must
A) find ways for managers to get people to buy stock in their company. B) devise compensation rules to induce principals to act in the best interest of agents. C) devise compensation rules to induce agents to act in the best interest of principals. D) find efficient agents who will negotiate fair compensation rules for a firm's principal managers.
For a firm to be economically efficient from society's point of view, it should produce to the point at which
A) marginal cost equals marginal revenue. B) marginal cost equals average total cost. C) marginal cost equals price. D) average total cost equals price.
Flexible exchange rates are determined by
A) the government of the exporting country. B) the government of the importing country. C) the forces of supply and demand. D) the IMF.
On a production possibilities frontier, the opportunity cost of one more unit of a commodity per time period is measured by the
a. monetary price of the commodity b. amount of the other commodity that must be sacrificed c. amount of unemployed resources that must be used d. amount of satisfaction it gives consumers e. amount of tax paid to government for production, sale, and use of the commodity