On the graph below sketch the income and substitution effects of a price increase for good X. 
What will be an ideal response?
Rotate the budget line around the higher indifference curve from its original tangency until it reaches a slope of 2. The new tangency point will divide the overall change in quantity between the substitution and income effects. The longer arrow above is the substitution effect and the shorter arrow is the income effect.
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Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?
What will be an ideal response?
If a firm can earn a profit stream of $50,000 per year for 10 years, that profit stream is worth
A) more than $500,000 today. B) $500,000 today. C) less than $500,000 today, but a positive amount. D) nothing today E) some amount, but whether it is more, less or the same as $500,000 cannot be determined.
What are the main determinants of demand elasticity? Explain their importance
The current role of the International Monetary Fund is one of
a. supervising a system of fixed exchange rates. b. providing assistance to countries with currency or debt problems. c. setting exchange rates based on a gold exchange standard. d. acting as a lender of last resort to central banks.