If the Fed buys government bonds through open-market operations, it will
A) increase the demand for bonds in the bond market.
B) decrease the demand for bonds in the bond market.
C) increase the supply of bonds in the bond market.
D) decrease the supply of bonds in the bond market.
Ans: A) increase the demand for bonds in the bond market.
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If a firm faces a downward-sloping demand curve
A) it will always make a profit. B) the demand for its product must be inelastic. C) it can control both price and quantity sold. D) it must reduce its price to sell more units.
Joseph has the utility function U(F,H) = 10F2H, where F is the quantity of food he consumes per year and H is the quantity of housing per week. Suppose the price of food is $10 and the price of housing is $5, while Joseph has an income of $150/week
a. Calculate Joseph's MRS as a function of the quantities F and H. b. Write out Joseph's constrained optimization problem with the information provide d. c. Using the substitution method, solve for Joseph's optimal consumption bundle of food and housing. d. Show that at the optimum, Joseph consumes the bundle along the budget constraint where MRS = MRT.
Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is
A) zero. B) positive. C) negative. D) either positive or negative.
In the market for labor:
A. individuals make up the demand. B. firms create the supply. C. the price in the market is the wage. D. individuals are never paid above their productivity.