In modern microeconomic theory, utility functions summarize:
A. cardinal information about preferences.
B. ordinal information about preferences.
C. absolute information about preferences.
D. both cardinal and ordinal information about preferences.
B. ordinal information about preferences.
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To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map
Also, suppose that all states initially impose state sales taxes on all goods (including food), but then the states exempt food from the state sales tax. How does this tax policy change alter the consumer's budget line? A) Makes the budget line steeper B) Makes the budget line flatter C) Parallel rightward shift D) Parallel leftward shift E) none of the above
Consider a market with a price ceiling. If the price ceiling is raised which of the following would happen?
a. The consumer surplus would increase, the producer surplus would decrease and the dead weight loss would decrease b. The consumer surplus would increase, the producer surplus would decrease and the dead weight loss would increase c. The consumer surplus, the producer surplus and the dead weight loss would all decrease d. The consumer surplus, the producer surplus and the dead weight loss would all increase e. The consumer surplus would decrease, the producer surplus would increase and the dead weight loss would decrease
A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called
A. a public good. B. a merit good. C. the free-rider problem. D. an externality.
The long-run aggregate supply curve occurs at the level of real GDP consistent with
A. the natural rate of unemployment. B. low levels of inflation. C. no inflation. D. individuals' tastes and preferences.