Assume that the budget constraint in the figure below is: P E E + P A A = I, where I is total income and P E is the price of education and P A is the price of all other goods. If U(E,A) = A + E, P E = 2, P A = 1, and I = 10. If the price of education drops to 1, how much of the two goods are consumed now?


Just as in question 1 but now she is indifferent between any combination of education and all other goods that are on her budget constraint.

Economics

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A reduction in unemployment benefits will

A) not change the amount of frictional unemployment because unemployment benefits affects only structural unemployment. B) increase the amount of frictional unemployment. C) decrease the amount of frictional unemployment. D) increase the amount of cyclical unemployment. E) not change the amount of frictional unemployment because unemployment benefits affects only cyclical unemployment.

Economics

How do economic profits and losses allocate resources in an economy?

What will be an ideal response?

Economics

In the fooling model, AD/SAS equilibria to the right of LAS are unstable because ________ nominal wages shift ________

A) falling, AD downward B) falling, SAS downward C) rising, AD upward D) rising, SAS upward

Economics

Marginal revenue

a. Is the additional revenue earned by selling one more unit b. Is always equal to the total revenue c. Is the difference between total revenue and total costs d. None of the above

Economics