Refer to the information provided in Figure 4.6 below to answer the question(s) that follow.Equilibrium in this market occurs at the intersection of curves S and D.
Figure 4.6Refer to Figure 4.6. If price is P1, consumer surplus is area
A. G.
B. A + B + E.
C. B + C + E + F + G.
D. A.
Answer: B
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In the figure above, as more six-packs of soda are consumed, moving along any of the illustrated indifference curves, the MRS between twelve-packs of soda and six-packs of soda
A) increases. B) decreases. C) stays constant. D) first increases, then decreases.
According to new classical economists, the most appropriate policy during a recession would be for the government to
a. increase the minimum wage. b. impose wage and price controls. c. cut taxes and increase the budget deficit. d. do nothing.
Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?
a. People respond to incentives b. Rational people think at the margin c. Trade can make everyone better off d. Markets are usually a good way to organize economic activity
The substitution effect takes place as we move
A. upward from I to J.
B. down from J to I.
C. up from J to K.
D. down from K to J.