Economic analysis assumes that Select one:
a. Individuals act only out of selfish motives.
b. Although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted.
c. People are basically humanitarian, and their actions are, therefore, impossible to predict.
d. Changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.
d. Changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.
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Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. The formula for the market-clearing curve for milk after the tax is:
A. Pm = 4 - (Pc/6). B. Pm = 5 - (Pc/6). C. Pm = 5 + (Pc/6). D. Pm = 2 - (Pc/6).
Extremely large budget deficits may lead to
a. low inflation. b. low employment. c. high unemployment. d. high inflation.
William quits his job where he earns an annual salary of $75,000 and opens a management consulting business, charging an hourly rate of $120 . He works out of his home, converting a storeroom into an office. (Zoning restrictions prevent William from renting out the room.) Start-up costs are financed by selling $15,000 worth of bonds he inherited that were earning annual interest payments of $900
. During his first year, William incurs expenses for supplies and utilities that total $3,500 . If William bills 500 hours of consulting time in the first year, he earns an economic profit equal to a. $55,600 b. -$15,000 c. -$19,400 d. -$34,400 e. $41,500
Bob purchases a book for $6, and his consumer surplus is $2 . How much is Bob willing to pay for the book?
a. $6. b. $2. c. $8. d. $4.