Refer to the following graph.
The Gini coefficient is calculated as area:
A. A divided by area A + B.
B. A divided by area B.
C. A + B divided by area B.
D. B divided by area A.
Answer: A
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Whenever indifference curves have kinks, marginal willingness to pay curves have horizontal "flat spots".
Answer the following statement true (T) or false (F)
Eliza consumes 12 cappuccinos and 8 apple turnovers per week. The price of a cappuccino is $4 each and apple turnovers are $1 each
a. What is the amount of income allocated to cappuccino and apple turnover consumption? b. What is the price ratio (the price of cappuccinos relative to the price of apple turnovers)? c. Explain the meaning of the price ratio you computed. d. If Eliza maximize utility, what is the ratio of the marginal utility of cappuccinos to the marginal utility of apple turnovers? e. If the price of apple turnovers falls, will Eliza consume more apple turnovers, fewer apple turnovers, or the same amount of apple turnovers? Explain your answer using the rule of equal marginal utility per dollar.
The principle of comparative advantage asserts that
a. not all countries can benefit from trade with other countries. b. the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. c. countries can become better off by exporting goods, but they cannot become better off by importing goods. d. countries can become better off by specializing in what they do best.
Which of the factors would decrease the rate of frictional unemployment?
a. an increase in the number of jobs available due to an increase in GDP b. increased short-term unemployment benefits c. improvements in technology that make skills which were once valued by employers obsolete d. the advent of the Internet, which makes finding available jobs easier