Cost functions must be homogeneous of degree 1 in (input and output) prices.
Answer the following statement true (T) or false (F)
True
Rationale: If all (input and output) prices go up by the same proportion, costs must be going up by the same proportion.
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For normal goods which of the following explains why demand curves slope downward?
A) prices and income B) substitutes and complements C) resources and technology D) substitution effect and income effect
If the production technology in a Robinson Crusoe economy has increasing returns to scale, there is no production/consumption plan that is efficient.
Answer the following statement true (T) or false (F)
What would best explain why a generally risk-averse person would bet $100 during a night of blackjack in Las Vegas?
A) Risk aversion relates to income choices only, not expenditure choices. B) Risk averse people may gamble under some circumstances. C) The economics of gambling and the economics of income risk are two different things. D) Risk-averse people attach high subjective probabilities to favorable outcomes, even when objective probabilities are known.
Index funds
a. typically have a higher rate of return and higher costs than managed mutual funds. b. typically have a higher rate of return and lower costs than managed mutual funds. c. typically have a lower rate of return and higher costs than managed mutual funds. d. typically have a lower rate of return and lower costs than managed mutual funds.