Which of the following are true about functions in the duality picture:
A. Compensated demand functions are homogeneous of degree zero in prices.
B. Uncompensated demand functions are homogeneous of degree zero.
C. Expenditure functions are homogeneous of degree zero.
D. Both (a) and (b).
E. Both (b) and (c).
F. Both (a) and (c).
G. All of the above.
H. None of the above.
Answer: D
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At the point at which the consumption function intersects the 45 degree reference line
A) planned real consumption of real disposable income equals zero. B) planned real saving equals real disposable income. C) planned real consumption equals real disposable income. D) equilibrium output is supply determined equilibrium output is determined by both.
A free rider in economic theory is someone who does not contribute toward covering the cost of goods which he desires because he
A) has a comparative advantage in defraying the cost of other goods. B) knows his paying or not paying will make no difference in their availability to him. C) regards all such costs as deadweight costs. D) regards all such costs as transaction costs.
If there is a sole producer of a good, and he faces no threat of competition, it is likely that:
A. government intervention will have no impact on the market. B. government intervention will raise prices to consumers. C. government intervention will increase total surplus. D. government intervention will make things better for buyers and sellers.
An investor wants to invest in the oil industry, but does not know which major companies will produce the greatest return. As a result, the investor buys shares in several oil companies. By buying several companies to reduce risk, the investor is seeking to reduce:
A. Systemic risk B. The risk premium C. Idiosyncratic risk D. Nondiversifiable risk