If income increases by $100 and saving increases by $25, the slope of the consumption function equals
What will be an ideal response?
1/4
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If you discover that the opportunity cost of raising your economics grade is zero, you
A. are studying too hard and receiving a higher grade than is optimal for you. B. must be on the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. C. must be inside the production possibilities frontier that describes your trade-offs between producing high grades and producing other goods. D. must be producing more of other goods than is optimal for you.
The price of a ticket to the latest Broadway musical is $80 . You will purchase a ticket if: a. you are acting irrationally b. you place a lower valuation on seeing the musical than $80 but are extremely bored. c. your expected marginal benefit from viewing the musical exceeds $80
d. your expected marginal cost from viewing the musical exceeds $80.
Explain what a mutual fund is and give an example of how they can help an investor diversify.
What will be an ideal response?
Refer to the diagram, in which S 1 and D 1 represent the original supply and demand curves and S 2 and D 2 the new curves. In this market the indicated shift in demand may have been caused by:
A. a decline in the number of buyers in the market.
B. a decline in the price of a substitute good.
C. an increase in incomes if the product is a normal good.
D. an increase in incomes if the product is an inferior good.