For choice sets emerging from "exogenous" income, the budget line will shift parallel whenever both prices change by the same percentage.
Answer the following statement true (T) or false (F)
False
Rationale: Since the slope of the budget constraint is the negative price ratio, the slope will remain the same if both prices increase by the same factor --- which means the new budget line will be parallel to the original.
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One of the advantages of floating exchange rates is that:
a. consumers always know how much imported goods cost. b. businesses always know, in advance, what future exchange rates will be. c. countries are free to pursue their own macroeconomic policies without maintaining exchange rates. d. countries cannot act independently and must thus coordinate their macroeconomic policies. e. the global interest rate tends to decline to the lowest possible level.
A depository institution's profit is derived from the difference between:
a. the interest rate it receives on loans and the rate it receives on investments in government securities. b. the interest rate it pays on deposits and the rate it receives on loans. c. its primary deposit and its derivative deposit. d. its assets and its liabilities. e. the interest rate it receives on domestic loans and the rate it receives on Eurodollar loans.
Kyle works for a perfectly competitive firm where he receives a wage rate of $15. From this, one can infer that:
A. Kyle's reservation wage is $15. B. Kyle's value of marginal product is at least $15. C. the price of the firm's output is at least $15. D. Kyle's marginal product is at least $15.
Which of the following industries is best characterized as monopolistically competitive?
A. Cereal B. Local electricity service C. Crude oil D. Wheat