The price elasticity of supply is calculated as the
A) percentage change in quantity supplied multiplied by the percentage change in price.
B) percentage change in quantity supplied divided by the percentage change in price.
C) percentage change in price divided by the percentage change in quantity supplied.
D) percentage change in quantity supplied plus the percentage change in price.
B
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A Californian student consumes Internet services (I) and books (B). Her preferences are represented by a Cobb-Douglas utility function:
U(I,B) = I1/4B1/4 The prices of each good is $2 and the student has an income of $200. Over the course of the past year, the price of internet services has risen to $4, but the price of books has remained the same. The government has decided provide this student with additional money to compensate for the higher price of internet services. In order to determine the transfer the government has three consultants who have made the following suggestions: Consultant A: The student's income should be increased by a percentage found using a consumer price index (CPI). Consultant B: The additional income should allow the student to get her initial level of utility. a. Find the consumer's optimal bundle before the increase in price occurs. b. Find the consumer's optimal bundle after the increase in price occurs with income still at $200. c. Find the amount of the transfer implied by consultant A. d. Is the student necessarily better or worse off than before from such a transfer implied by consultant A? Explain why. e. Is the transfer implied by consultant B more or less than the amount implied by A? Explain. What is the precise dollar amount implied by consultant B?
Microeconomics
A. studies individual decision making. B. studies aggregate behavior. C. cannot be applied too behaviors such as marriage. D. cannot be used to address questions of what ought to be.
Many nations are consistently accused of enjoying the benefits of membership in the United Nations, yet they provide few or no funds to support the organization. This is an example of
A) the principle of rival consumption. B) the free-rider problem. C) the negative externality problem. D) the property rights problem.
A country has $20 billion of domestic investment and net capital outflow of $10 billion. What is saving?
a. $10 billion b. $30 billion c. -$20 billion d. -$30 billion