Nick has $300 a month to spend on detailing his sports car or buying bottles of good wine. It costs $100 to have his car detailed and $50 for a bottle of wine. He currently buys four bottles of wine and has his car detailed once a month. If the price of detailing his car decreased to $75, Nick's budget constraint:
A. would rotate and change slope because relative prices have changed.
B. would shift straight outward, because he is relatively wealthier.
C. One cannot determine what would happen without knowing Nick's marginal utility of each good.
D. would shift straight inward because he is relatively wealthier.
Answer: A
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In the above figure, to achieve the efficient amount of paper production, the government could impose a tax of
A) $2 per ton. B) $8 per ton. C) $26 per ton. D) zero, because the efficient amount is produced with no government intervention.
Opportunity cost exists because
A) of scarcity. B) prices must adjust to eliminate shortages. C) production could not occur without the opportunity cost of using resources. D) the value of economic goods is positive while the value of goods is zero.
Loans made between lenders and borrowers are:
A. liabilities of the borrowers. B. not taxable in the state of origination. C. liabilities of the lenders. D. assets to the borrowers.
How does the federal government raise revenue? What is the largest source of revenue for the federal government? Do state governments also raise revenue from the same sources as the federal government?
What will be an ideal response?