If Sam and Sally are off their contract curve for dining hall tickets and economics texts and they meet to move to the contract curve, describe the conversation that would likely take place.
What will be an ideal response?
Sam tells Sally that he has finished the economics course that she is planning on taking next term and because he studied so hard he missed some meals and is hungry. Sally says that she hasn't missed a meal yet and so she wonders whether he would be willing to trade meal tickets for the text. They finally agree that Sally will give 3 meal tickets for the text.
Of course, numerous stories could be told, but they all should show that the MRS between goods for each person differ at the beginning making trade advantageous for both.
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One example of Ricardian rent is
a. rent paid to landlords under price controls. b. the difference between the wage of a star baseball player and what he could earn outside of baseball. c. the amount paid to a seller above the equilibrium price of tourist class tickets in order to receive higher quality seats in first class. d. the price rise of wool from a disease among sheep.
How are sunk costs and fixed costs related?
A) They are not related in any way. B) Sunk costs cannot be recovered and fixed costs can be avoided by shutting down. C) In the short run they are equal to each other. D) In the long run they are equal to each other.
When a perfectly competitive, well-functioning market is in equilibrium:
A. deadweight loss is zero. B. total surplus is maximized. C. the market is efficient. D. All of these are true.
The assumption that X has full column rank implies that
A) the number of observations equals the number of regressors. B) binary variables are absent from the list of regressors. C) there is no perfect multicollinearity. D) none of the regressors appear in natural logarithm form.