Graphically, the effect of a government subsidy on a good is shown as
A) a leftward shift of the market demand curve.
B) a rightward shift of the market demand curve.
C) a downward movement along the market demand curve.
D) no change to the market demand curve.
B
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When currency outstanding decreases,
A) gold certificates rise. B) the money supply increases. C) Fed assets decline. D) bank deposits at the Fed increase.
What is the key characteristic of profit maximizing price discrimination that distinguishes intertemporal price discrimination from peak-load pricing?
A) Peak-load pricing does not require MC = MR. B) Marginal revenue may be different across different groups of buyers under intertemporal price discrimination. C) Marginal costs are independent across time periods under peak-load pricing. D) Marginal revenue must be constant under both pricing schemes.
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations.
B) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits.
C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions.
D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions.
Refer to the diagram. This production possibilities curve is constructed so that:
A. resources are presumed to be perfectly shiftable between bread and tractors.
B. the opportunity cost of bread diminishes as more bread is produced.
C. the opportunity cost of tractors increases as more bread is produced.
D. the opportunity costs of both bread and tractors increase as more of each is produced.