Consumption smoothing is a logical consequence of ________
A) basing decision-making on real rather than nominal interest rates
B) the convexity of indifference curves and the ability to borrow and lend
C) the negative slope fo the intertemporal budget constraint
D) rational expectations
B
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The above figure shows the costs at Barney's Bagel Bakery. As the amount of output increases, the AVC curve approaches the ATC curve because the
A) TFC curve (not shown) slopes down. B) AFC curve (not shown) slopes down. C) MC curve is rising. D) AVC curve is rising.
Given a production possibilities curve for defense goods and non-defense goods, which of the following is not true?
a. A production point outside the curve may be attained if new resources are discovered. b. A production point outside the curve may be attained by acquiring a new technology. c. A production point outside the curve may be attained by shifting resources to defense goods. d. A production point outside the curve may be attained by acquiring both a new technology and greater resources. e. A production point outside the curve cannot be attained with the current level of resources and technology.
On a graph we draw a consumer's budget constraint, measuring the number of pineapples on the horizontal axis and the number of pencils on the vertical axis. If the slope of the budget constraint is -6, then
a. a pineapple costs six times as much as a pencil. b. the opportunity cost of a pineapple is 6 pencils. c. the opportunity cost of a pencil is one-sixth of a pineapple. d. All of the above are correct.
Which of the following examples gives an accurate reason for a firm to shut down?
a. Bertrand shuts down his hobby shop because TR > VC. b. Joan decides to shut down her coffee shop because P < AVC. c. Juan shuts down his restaurant because P < ATC. d. Chen shuts down his bakery because TR > MC.