Suppose that one can read a graph that shows information about price and quantity of some product. Relying solely on the graph, is it possible to explain the relationship between the two variables?
What will be an ideal response?
No. The graph does not, by itself, provide an explanation of the cause–effect relationship. For this, one needs economic theory.
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Timmy and Tommy are considering contributing to a project. If both contribute, each receives a payoff of 20. If neither contribute, each receives a payoff of 10
If only one person contributes, the person who contributes receives a payoff of 14 and the person who does not contribute receives a payoff of 18. Will the public goods problem prevent this project from being completed? Explain why or why not.
The figure above shows Ilene's budget line. If the price of a can of cat food rises, her budget line rotates so that the vertical intercept is
A) unchanged, but the horizontal intercept is closer to the origin. B) unchanged, but the horizontal intercept is farther away from the origin. C) farther away from the origin, but the horizontal intercept is closer to the origin. D) closer to the origin, but the horizontal intercept is farther away from the origin.
Which of the following types of expenditure is most likely NOT determined by an accelerator model?
A) consumer durable spending B) inventory investment C) residential housing construction D) consumer spending on food
Public choice analysis indicates that politicians will find
a. budget deficits more attractive than budget surpluses. b. budget surpluses more attractive than budget deficits. c. budget deficits attractive during an economic boom, but surpluses attractive during a recession. d. tax increases more attractive than increases in government spending.