Suppose the only two goods that Lorenzo consumes are wine and cheese. When wine sells for $10 a bottle and cheese sell for $10 a pound, he buys 6 bottles of wine and 4 pounds of cheese — spending his entire income of $100 . One day the price of wine falls to $5 a bottle, and the price of cheese increases to $20 a pound, while his income does not change. If you illustrate wine on the vertical
axis and cheese on the horizontal axis, then
a. the slope of Lorenzo's budget has not changed.
b. the slope of Lorenzo's budget constraint is flatter at the new prices.
c. the slope of Lorenzo's budget constraint is steeper at the new prices.
d. Lorenzo's budget constraint has shifted in a parallel fashion to the budget constraint with the old prices.
c
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Which of the following might be considered an automatic fiscal stabilizer?
A) government spending for the war effort B) 401(k) retirement program C) government budgeting for education D) unemployment compensation
Assume that the quantity consumed of pizza is dependent on three factors: the price of a pizza, the income of pizza purchasers, and consumers' taste for pizza
When graphing the relationship between the price of a pizza and the quantity of pizza consumed A) the price of a pizza and the income of pizza consumers are the only variables that are allowed to change. B) the price of pizza and quantity consumed of pizza are the only variables that are allowed to change. C) consumers' taste for pizza and the income of pizza purchasers are the only variables that are allowed to change. D) None of the above answers are correct.
A meditation class meets on the second floor of a building; the first floor is a nightclub. The loud music from the club disturbs the classes. The club could be soundproofed for a cost of $5,000 or move at a cost of $8,000 . The class can't soundproof enough to overcome the music, but could be moved for $4,000 . According to Coase, a socially optimal solution can be achieved if
a. the local government purchases the building b. the building is torn down c. property rights to be noisy are granted to the nightclub d. property rights to a quiet environment are granted to the meditation class e. both the nightclub and the meditation class relocate
Which of the following would be considered a component of government purchases?
a. Both d and e b. All of the following c. Welfare payments d. Police salaries e. Social security payments