An indifference curve:
A) may be either upsloping or downsloping, depending on whether the two products are complements or substitutes.
B) is downsloping and convex to the origin.
C) is upsloping and has a constant slope.
D) is downsloping and concave to the origin.
Answer: B) is downsloping and convex to the origin.
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In professional golf, a tournament winner might win, say, $1 million, whereas second place wins only $600,000. Why might golf have a 40% reduction in prize money from first and second place?
A) To ensure that there is enough money to pay those who finish near last. B) To motivate golfers to take risks they might not otherwise take. C) To motivate golfers to not take risks they might otherwise take. D) The Professional Golfers Association is a cartel.
Financial institutions that receive most of their funds from the savings of the public are
A) the fiduciary monetary system. B) the world index fund. C) universal banking. D) thrift institutions.
There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. If the inflation rate in the United States rises relative to the inflation rate in Mexico, it follows that
A) the dollar will appreciate and the peso will depreciate. B) both the dollar and the peso will appreciate, although the peso will appreciate before the dollar appreciates. C) the dollar will depreciate and the peso will appreciate. D) both the dollar and the peso will depreciate, although the peso will depreciate before the dollar depreciates. E) There is not enough information to answer the question.
A free market void of externalities ______ social surplus.
Fill in the blank(s) with the appropriate word(s).