If a consumer is at an optimum, consuming X and Y, and the price of Y decreases, then to get to a new equilibrium the consumer must
A) purchase less X.
B) purchase less Y.
C) purchase more X.
D) purchase more of both X and Y.
Answer: A
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Which of the following models results in the greatest deadweight loss assuming a fixed number of firms with identical costs and a given demand curve?
A) Cournot B) Stackelberg C) Monopoly D) Perfect competition
A firm may find it optimal to stay in business in the short run even if total revenue does not cover total cost
a. True b. False
Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25 × PCTV + 0.0005 × M + 0.3 × PSTV, where QCTV is the quantity of cable TV demanded (thousands of households), PCTV is the price of cable TV, M is income and PSTV is the price of satellite TV service. We can see that:
A. cable TV service is an inferior good. B. cable TV service is a normal good. C. cable TV service and satellite TV service are complements. D. cable TV service and satellite TV service are unrelated to one another.
During inflationary periods, consumers will
A. increase their time taken to search for the lowest prices of goods. B. may purchase goods when they need them. C. stick to one store. D. will save more of their income.