Which of the following is held constant along an indifference curve?
A) the prices of the goods in question
B) the total utility derived from consuming any bundle of goods on the indifference curve
C) the marginal rate of substitution between the two goods in question
D) the marginal utility derived from consuming any bundle of goods on the indifference curve
B
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A consumer who chooses the optimal bundle will go to a point on the highest attainable indifference curve.
Answer the following statement true (T) or false (F)
If a corporation begins to suffer large losses, then the default risk on the corporate bond will
A) increase and the bond's return will become more uncertain, meaning the expected return on the corporate bond will fall. B) increase and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall. C) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall. D) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will rise.
Asymmetric information occurs when
A) buyers and sellers are not equally informed about the true quality of what they are buying and selling. B) banks face an adverse selection problem with their borrowers. C) borrowers covertly engage in activities that increase the probability of poor performance. D) All of the above.
Refer to the above table. The price of B decreases from $18 to $15. What is the cross price elasticity of demand between B and A?
A. -1.0 B. -0.73 C. +1.83 D. +1.38