Use the above figure. Last week Joe consumed combination "A" of goods "X" and "Y." This week he purchased combination "B." The reason for this change is that the
A. price of good X has decreased.
B. price of good Y has decreased.
C. price of good Y has increased.
D. price of good X has increased.
Answer: B
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XYZ Gadget Company is currently considering which investment projects it should undertake. The following list of projects along with the estimated rate of return of each project is presented to the executive management team:Project A (9%)Project B (7.5%)Project C (6%)Project D (11%)Project E (5.5%)The current interest rate in the loanable funds market is 7%. However, the government is considering an increase in government borrowing to implement fiscal policy. How high would interest rates need to go to induce the company to drop all but one of its planned investment projects?
A. Above 9% B. Above 7% C. Above 7.5% D. Above 11%
The above figure shows the utility of wealth curve for a homeowner whose only possession is a $50,000 house
If there is a 20 percent chance that the home could be entirely destroyed, would this person buy a $20,000 insurance policy to replace the house if destroyed? A) No, it is too expensive. B) No, he is not risk averse. C) Yes, the homeowner would pay even more. D) Yes, this is the most the homeowner would pay.
Why are externalities called market failures? Are pecuniary externalities also an example of market failure?
What will be an ideal response?
Assume that the initial demand and supply curves in the above figure are DA and SA, respectively. The initial equilibrium price and quantity are
A) P1 and E. B) P3 and F. C) P1 and G. D) P2 and F.