Refer to the diagram where xy is the relevant budget line and I 1 , I 2 , and I 3 are indifference curves. If the consumer is initially at point L, he or she should:
A. strive for point N by obtaining a larger money income.
B. purchase more of X and less of Y.
C. remain at that point to maximize utility.
D. purchase more of Y and less of X.
D. purchase more of Y and less of X.
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If the Federal Reserve chooses to fight high unemployment with expansionary monetary policy and firms and consumers expect this policy to increase inflation, which of the following would you expect to see?
A) an upward shift of the short-run Phillips curve B) a downward shift of the short-run Phillips curve C) a decrease in the long-run aggregate supply curve D) Both B and C are correct answers.
Without changes in MC to maximize profits, the firm will produce at point ________ on the new demand curve and lower price to ________
A) E1; P1 B) E0; P0 C) E2; P2 D) E0 or E1; P0
Suppose anyone with a driver's license is capable of supplying one trip from the airport to the downtown business center on any given day. The long-run supply curve of such trips is horizontal at p = $50, which is the average cost of such trips
Suppose daily demand is Q = 1000 - 10p. Calculate the change in consumer surplus, producer surplus and social welfare if the city government requires those people supplying such trips to possess a special license, and the government will issue only 300 licenses.
Consider demand curve D in Figure 5-2. Between points F and G, the price elasticity of demand is
Figure 5-2
a.
1
b.
0.5
c.
2
d.
0.2
e.
none of these