One reason why a consumer might buy from a high-priced local hardware store instead of going to a big discount store several miles away in another community is that
a. the local store will still have lower money prices
b. the time cost of going to the local store is equal to going to the discount store
c. comparing the sum of money prices and time cost, the local hardware store is a bargain for people who value time highly
d. comparing the sum of money prices and time cost, the local hardware store is a bargain for people who earn low hourly wages
e. the time cost of going to the discount store is less than going to the local hardware store
C
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Suppose we observe people buying more of a good even though its price has risen. What would an economist conclude?
A) Impossible! We will never observe prices and quantity simultaneously rising in the real world. B) The demand curve for the good must be upward-sloping. C) The law of demand doesn't hold. D) The demand curve has shifted to the right. E) Consumption increasing as prices increase only occurs when a good is needed for survival.
If the two goods in an Edgeworth Box are perfect complements for both people, all efficient allocations will have each person getting the same amount of good 1 as of good 2.
Answer the following statement true (T) or false (F)
The fraction of deposits banks are required to keep as reserves is called the:
A) deposit requirement. B) reserve requirement. C) excess reserve requirement. D) none of the above.
The more excess reserves banks choose to keep
A) the larger the deposit multiplier. B) the smaller the deposit multiplier. C) the higher the required reserve ratio. D) the lower the required reserve ratio.