Describe the relationship shown by the investment demand curve.
What will be an ideal response?
The investment demand curve relates investment to the real rate of interest and the expected rate of return. Graphically the interest rate and expected rate of return are measured on the vertical axis and the amount of investment is measured on the horizontal axis. The investment demand curve has a negative slope reflecting the inverse relationship between the interest rate (the price of investing) and the aggregate quantity of investment goods demanded.
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Suppose this customer is known to throw a fit and scare away other customers if charged high prices. If the shopkeeper moves first, he would ask for
a. A high price b. A low price c. A pony d. All of the above
Conventional economic theory suggests that in the ultimatum game, the player proposing a split of $50 will propose that she get $49 and that the other player get $1 . By the same reasoning, if the amount to be split is $1000, the player proposing the split will propose that she gets
a. $500 and that the other player gets $500. b. $998 and that the other player gets $2. c. $999 and that the other player gets $1. d. $1000 and that the other player gets nothing.
Pepsi uses advertising to create the impression that Pepsi is superior to any other soft drink. Pepsi is attempting to:
A. differentiate Pepsi from other types of soft drinks. B. lower the marginal cost of producing for Pepsi. C. sell less Pepsi so they can raise the price of Pepsi. D. convince consumers that Pepsi is identical to other soft drinks.
According to the text, today's Lorenz curve is
A) a straight line. B) a vertical line. C) more bowed than in 1929. D) less bowed than in 1929.