Which of the following would be studied by macroeconomists?
A. Inflation in developing countries.
B. The effect of government subsidies on sugar prices.
C. The impact of the minimum wage on families below the poverty level.
D. The effect of rent controls on housing prices in New York City.
Answer: A
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Which of the following must be true about homothetic tastes:
A. Utility functions that represent those tastes are homogeneous of degree 1. B. There exists a utility function that represents those tastes and is homogeneous of degree 1. C. There exists a utility function that represents those tastes such that the expenditure function is homogeneous of degree 1. D. The indirect utility function is homogeneous of degree zero. E. Both (a) and (c). F. Both (b) and (c). G. Both (b) and (d) H. None of the above.
Suppose Canon Inc decided to invest 45 billion yen in developing and launching a new model of its digital camera, expecting that it will bring additional sales of 60 billion yen
The company has already invested 38 billion yen when the marketing department suddenly finds out that the introduction of a similar camera by Sony will reduce Canon's expected additional sales to 30 billion yen. The company's management is trying to decide whether to continue investing in the new product or close the project. Canon hires you as an economic consultant. So, think like an economist to help the company's management make their decision: a) At this point in time, what is Canon's marginal cost of introducing the new product? b) What is Canon's marginal benefit from introducing the new product? c) Will you advise Canon to finish the project and introduce the new product? Why or why not? What principles of economic thinking will help you analyze the situation and make the right choice?
The key difference between supply in the short run and supply in the long run is that we assume that firms:
A. are able to enter and exit the market in the short run. B. are able to enter and exit the market in the long run. C. will not collude in the short run. D. will have a total supply that is constant in the long run.
The assumption that nothing changes EXCEPT the variables being studied is
A. normative economic analysis. B. the rationality assumption. C. positive economic analysis. D. the ceteris paribus assumption.