Ernie has an income of $40 which he plans to spend on cookies and milk. The price of milk is $1 per gallon, and the price of cookies is $2 per dozen
If Ernie buys 12 gallons of milk, how many dozens of cookies will he buy if he spends all of his income? A) 28
B) 20
C) 14
D) 12
C
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Refer to the scenario above. If these four friends are the only bidders and each bidder uses his optimal strategies, the owner of the good will earn an expected revenue of ________
A) $210 B) $350 C) $500 D) $625
When a moral hazard problem exists for automobile driving, the marginal cost of driving
A) is lowered, and the amount of driving done is raised above the efficient level. B) is lowered, and the amount of driving done is lowered below the efficient level. C) is raised, and the amount of driving done is raised above the efficient level. D) is raised, and the amount of driving done is lowered below the efficient level. E) is raised above the efficient level, but market forces keep the total amount of driving is kept at the efficient level.
The crowding-out effect of an expansionary fiscal policy is the result of government borrowing in the market which
A. increases interest rates and net investment spending in the economy. B. increases interest rates and decreases net investment spending. C. decreases interest rates and increases net investment spending. D. decreases interest rates and net investment spending.
A Real Option Value is:
a. An option that been deflated by the cost of living index makes it a "real" option. b. An opportunity cost of capital. c. An opportunity to implement cost savings or revenue expansion in a flexible business plan. d. An objective function and a decision rule that comes from it. e. Both a and b.