The figure above shows a preference map for Sarah, who likes hamburgers and milk shakes
a) Which two combinations contain the same amount of hamburgers but different quantities of shakes?
b) Which combination(s) does Sarah most prefer? Why?
c) Which combination(s) does Sarah least prefer? Why?
d) Between which combinations is Sarah indifferent? Why?
a) Combinations a and b have the same amount of hamburgers but different amounts of milk shakes.
b) Sarah most prefers combination d because it is on the highest indifference curve.
c) Sarah least prefers combination a because it is on the lowest indifference curve.
d) Sarah is indifferent between combinations b and c because they are on the same indifference curve.
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Explain how positive externalities cause a wedge between private marginal costs and social marginal costs. Give an example of a positive externality and explain why it is, in fact, a positive externality. Draw a supply/demand diagram and add a social marginal cost curve that represents the presence of the positive externality. Explain the relationship between the equilibrium quantity and that which is socially efficient.
What will be an ideal response?
Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes
What is Deb's opportunity cost of assembling 1 packet? A) 4 envelopes B) 4 packets C) 160 envelopes D) 1/4 of an envelope E) 40 envelopes
Refer to Figure 9-5. As a result of the tariff, domestic producers increase their quantity supplied by
A) 6 million pounds of coffee. B) 18 million pounds of coffee. C) 26 million pounds or coffee. D) 38 million pounds of coffee.
If the MPC = 0.75, a decrease in personal taxes from $100 billion to $80 billion will increase real GDP by
A) $20 billion. B) $40 billion. C) $60 billion. D) $80 billion.