A proposal to build a dam on a wild river may look like a good idea from the cost/benefit study done by the Army Corps of Engineers, but an analysis done by the Sierra Club might suggest that the dam would be a complete waste of money. Differences in cost/benefit studies such as this are expected because:
A. at least one side is definitely making mistakes in the analysis.
B. items that do not have market prices, such as the environment, are very difficult to value objectively.
C. at least one side is trying to deceive the public.
D. cost/benefit studies describe what people want to happen, not what will actually happen.
Answer: B
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The above figure shows the demand curve for movie rentals from Redbox. Which of the following is TRUE?
A) Consumer expenditure on movie rentals will always increase whenever Redbox lowers its price. B) Redbox will receive more total revenue if it charges $4.00 per movie rental rather than $3.00. C) The price elasticity of demand for movie rentals falls as Redbox raises its price. D) The demand for movie rentals is more price inelastic at $1.00 than it is at $1.50.
If the price level should increase in the near term due to decreases in the short-run aggregate supply, the result would be
A) demand-pull inflation. B) demand-pull recession. C) cost-push inflation. D) cost-pull expansion.
In the real world, demand is not likely to be perfectly inelastic at every price because
a. no substitutes exist for some goods b. some consumers will be unable to afford very high prices with given incomes c. at low prices, consumers always want a lot d. consumers are willing to pay any price for certain goods e. the prices of certain goods don't change
A risk neutral person's utility of income curve is _____________
Fill in the blank(s) with the appropriate word(s).