Refer to the figure above. What is the equilibrium rate of interest when the credit demand curve is CD1 and the credit supply curve is CS1?
A) 2% B) 3% C) 5% D) 4%
D
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An increase in subway fares in New York City will boost your expenditures on subway rides if
A) the supply of subway rides is elastic. B) the supply of subway rides is inelastic. C) your demand for subway rides is elastic. D) your demand for subway rides is inelastic.
In the above figure, the long-run average cost curve exhibits constant returns to scale
A) between 5 and 10 units per hour. B) between 10 and 20 units per hour. C) between 20 and 25 units per hour. D) along the entire curve.
Using the government as a means of redistribution generates equity at the cost of efficiency, in part because
A) the process of redistribution uses up some of society's resources. B) the process of redistribution creates new resources for society. C) redistribution creates new incentives to work for both rich and poor. D) redistribution would not take place otherwise.
Mark has two job offers when he graduates from college. Mark views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Mark believes that he has a 50-50 chance of earning the bonus. If Mark takes the offer that maximizes his expected utility and is risk-loving, which job offer will he choose?
A. Mark will take the first offer. B. Mark will take the second offer. C. Mark is indifferent between the offers-both yield the same expected utility. D. Indeterminate from the given information.