Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending:
A. State College.
B. NoName U because he has a full scholarship there.
C. NoName U because the annual cost is only $20,000.
D. Elite U.
Answer: A
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Economic models
A. are always based on realistic assumptions. B. usually predict perfectly. C. can never be tested with real-world data. D. are used to describe cause-and-effect relationships. E. are too simple to be of much use.
A foreign bank receives a deposit of $10,000 from a U.S. citizen. As a result, there is a net capital outflow from the U.S., if ________
A) the bank buys a U.S.-made computer B) the bank buys a bond issued by a U.S. company C) the bank keeps the $10,000 in a vault D) all of the above E) none of the above
In the long run in a competitive market,
a. existing firms can increase their plant size, and new firms can enter the market b. existing firms can increase their plant size, but the number of firms is the market is fixed c. new firms can enter the market, but existing firms cannot vary their plant size d. new firms can enter the market, but only if existing firms decrease their plant size in the short run e. existing firms can increase their plant size, only if some other firms exit
The imposition of a per unit tax on a product
A. will cause the supply curve to shift upward and to the left. B. will cause the supply curve to shift downward and to the right. C. will reduce the quantity supplied of the product. D. will encourage producers to increase the quantity supplied of the product.