Kris, Taylor and Max are the only three residents in a neighborhood. A public good that would benefit all of them has a one-time installation cost of $900. The value of the public good to each resident is shown in the table below. Any tax plan must be approved by simple majority. ResidentReservation PriceIncomeKris$100$1,000Taylor$200$5,000Max$700$6,000 Installing the public good would ________ total economic surplus by ________.
A. decrease; $100
B. increase; $100
C. increase; $1,000
D. decrease; $900
Answer: B
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After running a promotional campaign, the owners of a local shoe store decided to decrease the prices for the shoes sold in their store. One can imply that
a. The promotional expenditures made the demand for their shoes more elastic b. The promotional expenditures made the demand for their shoes more inelastic c. The promotional expenditures has no effect on the shoe demand elasticity d. The owners got it wrong. To cover the promotional expenses, they should have raised the prices.
Elena Johnson owns 100 shares of Funky Foods, which has 100,000 shares of stock outstanding. Funky Foods is expected to earn $1 million in after-tax profits every year forever. The interest rate is 5 percent (0.05) per year. According to the principle of asset valuation, what is the value of Elena's shares?
a. $200,000 b. $10,000 c. $20,000 d. $100,000 e. $2,000
Based on the graph showing U.S. health care expenditures as a percentage of GDP, during which period did health care expenditures remain fairly steady?
a. 2000 to 2006
b. 2006 to 2009
c. 2009 to 2013
d. 2013 to 2016
The quantity theory of money assumes that the velocity of money:
A. is constant. B. will rise if the money supply rises and fall if the money supply falls. C. will rise if the money supply rises, but it will not change if the money supply falls. D. will fall if the money supply rises, and it will rise if the money supply falls.