Which of the following statements is correct about the concept of willingness to pay?
A) The willingness to pay is the lowest price that a buyer is willing to pay for an extra unit of a commodity.
B) The willingness to pay for a commodity increases exponentially as the consumption of the commodity increases.
C) The willingness to pay for a commodity increases linearly as the consumption of the commodity increases.
D) If a consumer is consuming 10 units of a commodity and he is ready to pay $2 for the eleventh unit, his willingness to pay for the eleventh unit is $2.
D
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A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125. Using the midpoint method, what is the price elasticity of demand?
A) 0.75 B) 1.00 C) 1.25 D) 0.50 E) 0.0
In a classic administrative snafu, the Army assigns trained classical musicians to kitchen duty and places trained cooks in the military band. This is an example of inefficiency in
a. output selection. b. production planning. c. product distribution. d. market segmentation.
The figure below represents the U.S. market for steel imports from South Korea. The South Korean government provides an export subsidy of $25 per ton, and South Korean firms use the subsidy to reduce their export price to the United States to $375 per ton.
The change in national welfare in the United States when the South Korean government provides an export subsidy of $25 per ton is
A. + $375 million. B. + $4.125 billion. C. -$4.5 billion. D. - $3.75 billion.
What are the differences between classical theory and what Keynes believed?
What will be an ideal response?