What is the slope of the price consumption curve for two goods, x and y, when preferences are measured by the utility function U(x,y) = x0.5y0.5, the price of good y is $10, income equals $100, and the price of good x increases from $5 to $10?
A) slope equals zero
B) slope is -(1/2)
C) slope is 1/2
D) slope is infinite
Answer: A) slope equals zero
You might also like to view...
Negative externalities arising from the production of a good
A. cause an increase in the demand for the good. B. cause a decrease in the demand for the good. C. impose costs on third parties. D. bring private costs into equality with social costs.
When can a country gain a price advantage on imports by imposing a tariff?
A. When it is the largest country with absolute advantage in all goods B. When it has a comparative advantage in the production of all goods C. When it can do so without other countries retaliating with tariffs D. When trade agreements prohibit quotas but permit tariffs
Below the short-run shutdown price, the firm
A) is earning positive economic profits. B) is earning negative economic profits. C) is making a normal rate of return on its capital investment. D) may be earning a positive or negative economic profits depending upon costs.
This graph demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.
According to the graph shown, the change in consumer surplus brought about by the imposition of a tariff to an economy previously open to free trade is:
A. a loss of DE. B. a gain of DE. C. an increase of HIJKL. D. a loss of HIJKL.