Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price of Y is $1 per unit. If the price per unit of good X is $1, the optimal consumption is found at point
A. D.
B. E.
C. C.
D. B
Answer: C
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Critically evaluate the following statement. "I am definitely in favor of free trade but only if it means fair trade."
What will be an ideal response?
A difficulty with using a uniform per-unit tax to address a negative externality is that
A) the tax will reduce output. B) the tax will increase price. C) the social cost of pollution might vary across geographic regions. D) the social cost of pollution should not be assessed on the consumers, but should be assessed on the firms.
Refer to the above table. How do we know that this is not a competitive firm?
A) The marginal physical product decreases as the amount of labor hired increases. B) The marginal revenue changes as output changes. C) The marginal revenue product decreases as the amount of labor increases. D) Marginal physical product cannot be computed for competitive firms.
Banks have more expertise than individual households in making loans because banks: a. lend smaller amounts of money
b. are regulated by the government. c. also pay interest to savers. d. are subject to severe penalties if they make bad loans. e. make many more loans than individual households do.