As the rate of inflation increases, the increased cost to a consumer of more frequent trips to the bank to make cash withdrawals represents an increase in the:
A. tax distortion generated by inflation.
B. erosion of the purchasing power of cash.
C. "noise" in the price system.
D. shoe leather costs of inflation.
Answer: D
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Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. 
In the equilibrium of this game:
A. Tracy gets 25 and Amy gets 225. B. Tracy gets 300 and Amy gets 200. C. Tracy gets 75 and Amy gets 150. D. Tracy and Amy both get 125.
The law of demand refers to how
A) demand changes when people's incomes change. B) demand changes when the prices of substitutes and complements change. C) the quantity demanded changes when the price of the good changes. D) the price of the good changes when people's demand for the good changes. E) the quantity demanded changes when the demand for the good changes.
If the absolute price elasticity of demand is 2.0, a 5 percent decrease in price will increase quantity demanded by
A) 10 percent. B) 20 percent. C) 25 percent. D) 5 percent.
John raises bees to pollinate his orchard. A couple of bees which escaped ended up pollinating his neighbor's orchard, so
A) John's neighbor has received an internal cost of John's bee-keeping. B) John's neighbor has received an external cost of John's bee-keeping. C) John's neighbor has received an external benefit of John's bee-keeping. D) None of the above is correct.