Answer the following statement(s) true (T) or false (F)
1. Firms have an incentive to practice planned obsolescence, because it increases their volume of sales and gives them higher profits.
2. Artists as a whole would be better off if they received royalty payments each time their work was resold.
3. If an annual tax of $560 per acre is levied on land, then land values will fall by $560 per acre.
4. If water can be bottled at zero marginal cost, and if water prices are growing slower than the rate of interest, then owners would benefit by increasing their current bottling operations.
5. The market interest rate equals the absolute slope of the representative agent's indifference curve at the endowment point, minus 1.
1. False
2. False
3. False
4. True
5. True
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When the dollar depreciates, the prices of imported inputs
A. fall and aggregate supply shifts outward. B. fall and aggregate supply shifts inward. C. rise and aggregate supply shifts outward. D. rise and aggregate supply shifts inward.
The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon
A) is greater than her consumer surplus from the 8th gallon. B) is the same as her consumer surplus from the 8th gallon. C) is less than her consumer surplus from the 8th gallon. D) could be greater than, equal to, or less than the consumer surplus from the 8th gallon.
Suppose you are deciding how much oil to pump from your oil well in the next ten years. If you know oil would sell for $5 per gallon in ten years and the real interest rate is about 4%, the present value of the opportunity cost of selling the oil today would be about
A. $4.00. B. $2.50. C. $0. D. $3.38.
Suppose the United States chose to legalize the production and use of marijuana, but also decided to put a tax on the good (with the tax paid by producers). After doing so, suppose that the price that consumers paid rose, and the amount that growers got to keep fell. This would
A. indicate that the demand-side effect was smaller than the net supply-side effect. B. be shockingly counter-intuitive, because there would be no supply-and-demand model that could explain it. C. suggest that the supply curve is vertical. D. indicate that the demand-side effect was greater than the supply-side effect.