Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14 . Her price elasticity of demand is:
a. 0.
b. 1.
c. 2.
d. 3.
e. 4.
c
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For each of the following statements, define all of the underlined terms. Then, explain why the statement is true or false
a. If a consumer views two goods as perfect substitutes then their optimal choice will be a corner solution. b. The substitution effect from a price increase states that the consumer will always choose a smaller amount of that good to consume. However, the income effect states that consumption can move in either direction. c. Suppose Alf and Bo have convex indifference curves. Alf likes units of "X" more than units of "Y" but Bo likes units of "Y" much more than units of "X." Then, in the optimum, Alf's marginal rate of substitution will be different from Bo's even if they face the same prices. d. All Giffen goods are normal goods, but not all normal goods are Giffen goods. e. Economists assume that preferences are ordinal. This implies that given two utility functions and one is a monotonic transformation of the other, then they represent the same preferences over bundles of goods.
This firm's most profitable output is at
A. 150.
B. 230.
C. 300.
D. 350.
Which of the following is (are) the typical assumption(s) used in the study of mutually beneficial trades?
A) Each agent maximizes her utility. B) Agents have convex-shaped indifference curves. C) An agent's utility is not interdependent of the other agents' utilities. D) All of the above.
A person's wealth is the total value of all the things they own.
Answer the following statement true (T) or false (F)