Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food (F) and $100 is the price of shelter (S). How much food can Joe buy if he buys one unit of shelter?
A) 2 units
B) 200 units
C) 250 units
D) 400 units
B
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According to the rational inattention theory, during the periods between informational updates
A. firms always change product prices more than the inflation rate. B. firms fail to fully adjust product prices. C. firms change the wages of their employees but keep product prices unchanged. D. firms fully adjust product prices.
Refer to the information provided in Figure 34.1 below to answer the question(s) that follow.
Figure 34.1Refer to Figure 34.1. The ________ in this economy is 1.25.
A. MPS B. MPC C. MPM D. open economy multiplier
If the agent has more information than the principal and there is only one state of nature, then
A) efficiency in both production and risk-bearing can be achieved. B) only efficiency in production can be achieved. C) only efficiency in risk-bearing can be achieved. D) neither efficiency in production nor efficiency in risk-bearing can be achieved.
The ICP index:
A. is an imperfect measure because of cultural differences. B. is an imperfect measure because of typical weather and geographical differences. C. uses a broad market basket that tries to represent the full cost of living across countries. D. All of these statements are true.