If a consumer has a choice between only two goods and both of them are perfect substitutes what would the indifference curve look like and why?
What will be an ideal response?
The indifference curves would be downward-sloping and linear since the consumer would be willing to trade them at a fixed ratio.
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If trade policies change, then we would expect aggregate expenditure to:
A. increase. B. decrease. C. remain constant. D. depends on the policy.
The economic way of thinking indicates that government action will
a. never improve on the allocation of resources through markets. b. always improve on the results of markets if the political process is democratic. c. reflect the actions of political decision-makers seeking to advance the public interest, rather than their own personal interests. d. can either improve the well-being of the general public, or harm it, depending on the circumstances.
Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 and Acme matches the price cut, then if consumers are evenly split between the two firms, Acme's economic profit will be ________.
A. $75 B. $150 C. $200 D. $100
?Hair Pins /hourBandanas /hourNigel410Mia93
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 18.3. Which of the following is TRUE?
A. Nigel has an absolute advantage in producing hair pins but not bandanas. B. Nigel has an absolute advantage in producing bandanas but not hair pins. C. Nigel has an absolute advantage in producing both goods. D. Nigel does not have an absolute advantage in producing either good.