The above figure shows Bobby's indifference map for soda and juice. B1 indicates his original budget line. B2 indicates his budget line resulting from a decrease in the price of soda. What change in quantity best represents his income effect?
A) 3
B) 10
C) 15
D) 7
D
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Refer to Figure 14-4. What is the equilibrium outcome in this game and is this a subgame-perfect equilibrium?
A) Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame-perfect equilibria. B) In the equilibrium, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame-perfect equilibria. C) Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame-perfect equilibria. D) In the equilibrium, Odeon offers $40 per copy of the software package and is accepted but this is not a subgame-perfect equilibrium.
Public finance economists should only concern themselves with positive economic analysis
a. True b. False
Suppose the short-run production function is q = 10 ? L. If the wage rate is $10 per unit of labor, then MC equals
A) q. B) q/10. C) 10/q. D) 1.
When attempting to explain why a consumer purchases a Ford automobile instead of a Honda automobile, or a Compaq computer instead of an IBM computer, an economist would assert:
a. that the consumer is making a decision based on what gives him maximum utility. b. that everyone knows Hondas are superior to Fords; the consumer cannot possibly be maximizing his utility. c. that everyone knows IBM computers are superior to Compaq computers; the consumer may be maximizing his utility at the margin, but is not maximizing total utility. d. that there is no standard explanation for consumer choices because consumers have varied tastes and preferences. e. that since rationality is bounded by lack of information, a consumer purchases goods based on convenience rather than on utility maximization.