If a restaurant guest said, "Every bite, including the last bite, tasted as good as the first," then the marginal utility for her
A) is decreasing.
B) is increasing.
C) is constant.
D) is positive.
Answer: C
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Refer to the scenario above. If each bidder uses his/her dominant strategy, who will get the good being auctioned?
A) Tom B) Pat C) Arthur D) Julie
In your environmental economics study group, a friend argues that using taxes to control pollution is not efficient because, even with taxes, a positive amount of pollution is still produced. Do you agree?
What will be an ideal response?
Refer to Scenario 5.5. Jalopy Automotive's executives,
A) if risk-neutral, would fix the flaw because it enables them to have a sure outcome. B) if risk-neutral, would fix the flaw because the cost of fixing the flaw is less than the expected cost of not fixing it. C) if risk-loving, would fix the flaw because it enables them to have a sure outcome. D) if risk-averse, would not fix the flaw because the cost of fixing the flaw is more than the expected cost of not fixing it. E) would fix the flaw regardless of their risk preference, because of the large probability of high-cost outcomes.
The information conveyed by changes in market prices is especially important in financial markets because
a. It forces individual investors to reveal their information about the prospects of a security b. It assesses business decisions c. It helps firms forecast the future demand for products d. All of the above