Assume that a consumer spends a given budget on only two goods, and that the prices of the two goods are constant. The budget line in this case would:
A. Definitely be a straight downward-sloping line
B. Possibly be a straight upward-sloping line
C. Be a curved graph bowed outwards
D. Be a curved bell-shaped graph
Answer: A
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Potential GDP is estimated to grow at a rate of 3.2% in the United States. Actual GDP in the U.S
A) always grows at a slower rate than potential GDP. B) is the same as potential GDP if all firms in the economy were working at capacity. C) always grows at the same rate as potential GDP. D) always grows at a faster rate than potential GDP.
Penetration pricing is:
A. a way to overcome an incumbent's first-mover advantage. B. ineffective in markets with strong networks. C. a way to raise a rival's fixed cost. D. a way to raise a rival's marginal cost.
An imperfectly competitive firm is one that:
A. seeks to maximize revenue. B. has at least some influence over the market price. C. charges any price it wants. D. faces a perfectly inelastic demand curve.
A relatively high base income in a cash assistance program:
A. reduces the incentive to work. B. increases the incentive to work. C. does not affect the incentive to work. D. will reduce the incentive to work through the substitution effect but will increase the incentive to work through the income effect.