Indifference curves cannot ever be concave for two goods
Indicate whether the statement is true or false
False. While indifference curves are typically convex, they can be concave. This means, however, that the MRS of y for x increases as x increases. That is, the consumer places greater value on the next x the more x she has. The interpretation is that a consumer with concave indifference curves prefers to specialize in either x or y but not have a mix of both.
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When the price of a pizza is $10, the quantity of soda demanded is 300 drinks. When the price of a pizza is $15, the quantity soda demanded is 100 drinks. The cross elasticity of demand is equal to
A) -0.25. B) -0.40. C) -2.50. D) -25.00. E) 4.00.
The decrease in the incentive to work created by welfare payments programs
A) only affects low income taxpayers. B) only affects taxpayers but not welfare recipients. C) only affects high income executives. D) affects both taxpayers and welfare recipients.
The simplest economic definition of discrimination is
a. prejudice. b. unequal pay for equal work. c. a dislike by one group of associating with another group. d. unequal pay for unequal work.
The principle of comparative advantage explains how
A. one nation can take advantage of another one through international trade. B. two nations may engage in mutually beneficial trade, even though one of them is more productive than the other. C. one individual can take advantage of another through international trade. D. some people are good at producing everything, while others have no comparative advantages. E. some nations end up with large trade surpluses.