Suppose a family has saved enough for a 10 day vacation (the only one they will be able to take for 10 years) and has a utility function U = V1/2 (where V is the number of healthy vacation days they experience). Suppose they are not a particularly healthy family and the probability that someone will have a vacation-ruining illness (V = 0) is 20%. What is the expected value of V?
a. 10
b. 8
c. 2
d. 0
b
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Suppose that when the price of oranges is $3 per pound, the quantity demanded is 4.7 tons per day and the quantity supplied is 3.9 tons. In this case:
A. excess demand will lead the price of oranges to rise B. excess supply will lead the price of oranges to rise C. excess supply will lead the price of oranges to fall D. excess demand will lead the price of oranges to fall
If firms in a monopolistically competitive industry are making an economic profit, then definitely there is
A) a leftward shift in each firm's demand curve as new firms enter the market. B) a rightward shift in each firm's marginal revenue curve as new firms enter the market. C) an upward shift in each firm's cost curves as new firms enter the market. D) All of the above answers are correct.
Negative demand shocks have a tendency to ________ real GDP relative to potential GDP and ________ the inflation rate
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
The basic data source to track the number of unemployed comes from a calculation of applications for new unemployment benefits.
Answer the following statement true (T) or false (F)