In output markets, the elasticity of supply tends to be
A. positive.
B. negative.
C. zero.
D. decreasing at an increasing rate.
Answer: A
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Suppose the only two goods you care about in the world are French wine (x) and Cuban cigars (y) and your utility function is given by u(x,y)=xy. You have no income, and the only thing in the world you possess is a large box you have just inherited from your rich uncle who passed away last week (of liver and lung cancer.) You open the box, and much to your liking, you find it contains 9 bottles of fine French wine and 3 boxes of exquisite Cuban cigars. Currently, the wine sells for $1 per bottle, and the cigars sell for $9 per box. Just as you receive the inheritance, you read the headline: "President Lifts Embargo - Price of Cuban Cigars Falls to $4 per Box!" a. Determine the income (or wealth) and substitution effects of a decrease of the price of cigars from 9 to 4. (Assume
fractions of bottles and cigars can be bought.) b. Are cigars a normal or inferior good for you? c. How much would you have been willing to pay the President in order not to lift the embargo? What will be an ideal response?
What is a market demand curve?
a. a table showing how much of a product an individual is willing and able to buy b. a table showing how much of a product a market is willing and able to buy c. a graph showing how much of a product an individual is willing and able to buy d. a graph showing how much of a product a market is willing and able to buy
Which of the following is not considered a renewable resource?
A. Sunlight B. Wind C. Fish in the ocean D. All of these are renewable resources.
Between 1995 and 2012, the U.S. productivity rate:
A. was slightly negative, mainly because of record levels of employment growth. B. grew substantially compared to prior years, leading some economists to predict a long- lasting resurgence of productivity growth. C. slowed considerably relative to the high rates between 1990 and 1995. D. reached record low levels for the United States' economy, leading some economists to talk of a long-term trend of stagnation.