Happy Cows is a perfectly competitive dairy farm that has consistently faced a 50 percent chance of a high demand of $5 and a 50 percent chance of a low demand of $4. The managers of Happy Cows learn that there is now a 50 percent chance of a high demand of $8 and a 50 percent chance of a low demand of $2. All else equal, the change in the high and low demand values makes an accurate forecast
________ valuable to Happy Cows as the firm stands to gain ________ profit from an accurate forecast.
A) more; less
B) less; less
C) less; more
D) more; more
D) more; more
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The ratio of the prices of two goods multiplied by -1 is equal to the slope of the budget line
a. True b. False
The Intracoastal Bank has $5 million in deposits and $500,000 in reserves. If the required reserve ratio is 5%, excess reserves are equal to
A. zero. B. $125,000. C. $250,000. D. $500,000.
Assume that an economy producing two products, skateboards and in?line skates, is initially in equilibrium, and that skateboards and in?line skates are substitutes. If consumer preferences shift away from skateboards and toward in?line skates, which of the following will not occur?
A. Additional capital will begin to flow into skateboard production in the long run. B. Additional capital will begin to flow into in?line skates production in the long run. C. In the short run, firms producing skateboards will incur losses. D. In the short run, firms producing in?line skates will earn a profit.
If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost
A) the marginal benefit will rise and the marginal cost will fall as further reductions are made. B) private businesses, rather the consumers, should be made to pay for the cost of further reductions. C) further reductions will make society better off. D) economic efficiency will be achieved when emissions are reduced to zero.