What is search activity and how does it influence consumer surplus when a rent ceiling creates a housing shortage?
What will be an ideal response?
Search activity is the time spent looking for someone with whom to do business. When a rent ceiling creates a shortage of housing, search activity increases. As people spend more time searching for rental housing, the opportunity cost of housing, which is the rent plus the value of the search time, increases and therefore consumer surplus shrinks.
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If an individual's utility function is quasi-concave, his or her MRS will:
a. diminish as x is substituted for y. b. increase as x is substituted for y. c. be undefined except in special cases. d. always depend only on the ratio of x to y.
Which of the following slogans use customer loyalty to sell its product?
a. You know these hamburgers are good, they're Wendy's. b. Wendy's Hamburgers, a new type of burger c. Treat yourself to the best burgers, eat at Wendy's d. Get the most for your money, eat Wendy's Hamburgers.
Restrictive monetary policy will:
A. Decrease the lending capacity for banks. B. Reduce interest rates. C. Cause a rightward shift of aggregate demand. D. Raise the equilibrium price level.
What is the percentage of income received by the upper two quintiles on line L?
