Somebody steals silverware from the dinner table at a nice restaurant
You question them and they justify their behavior by saying, "The restaurant management knows customers steal–they raise the price of their meals and drinks to cover the additional costs of stolen items. Since they pass on the higher costs to all of us who haven't stolen, I think it is only fair I finally get my share of the silverware." The economist would view the above statement as: A) incorrect, because even though people stole silverware, it doesn't make it any more profitable to raise prices.
B) correct, because what's fair is fair.
C) correct, because economics champions such selfish behavior.
D) an ethical problem, and it has nothing to do with economics.
A
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Collusion makes firms better off because if they act as a single entity (a cartel) they can reduce output and increase their prices and profits. But some cartels have failed and others are unstable
Which of the following is a reason why cartels often break down? A) Most cartels do not have a dominant strategy. B) Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement. C) Members of a cartel may resent having to share their profits equally. D) When a cartel is profitable the amount of competition it faces increases.
Suppose that the Treasury decides to spend $12 billion on a given day
Because about $12 billion in new tax revenues are expected to replenish the Treasury's account at the Fed a week later, the best policy for the Fed to pursue if it wishes to stabilize reserves is to A) do a $12 billion government security repurchase agreement. B) do a $12 billion government security reverse repurchase agreement. C) buy $12 billion in government securities outright and hold them to prevent bank reserves from falling. D) sell $12 billion in government securities to prevent bank reserves from rising.
If an increase in income results in a rightward parallel shift of the demand curve, then at any given price, the price elasticity of demand will have
A) increased in absolute terms. B) decreased in absolute terms. C) remained unchanged. D) increased, decreased or stayed the same. It cannot be determined.
If you know the average propensity to consume you can determine the average propensity to save. How is that possible?
What will be an ideal response?