Samia makes $8,000 a month. Samia spends $2,500 on rent and related household expenses, $500 on food, $200 on clothes, $500 on entertainment and $600 on transportation. She always keeps $200 for things like the car breaking down
$3,500 is invested in the stock market. Which of the following statements is TRUE?
A) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $0.
B) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $3,500.
C) The transactions demand for money is $3,500, the precautionary demand is $200 and the asset demand is $4,300.
D) The transactions demand for money is $4,300, the precautionary demand is $3,500 and the asset demand is $200.
A
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Once production has reached the maximum average product of labor, if production increases then
A) average fixed cost rises. B) total costs decrease. C) total product decreases. D) decreasing marginal returns occur. E) the plant size must be increased.
In the above figure, if the market price rises from $100 to $125 per ton of wheat, then producer surplus
A) decreases. B) does not change. C) increases. D) might increase, decrease, or not change depending on how the demand curve for wheat shifts.
The invention of a machine that increases milk production is discovered. If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?
A. A decline in the price of milk B. Excess demand for milk C. Excess supply of milk D. Neither a shortage nor a surplus of milk
Suppose that you rent a house next to a factory. The factory legally emits a chemical into the air that smells like feet. You now have to spend $300 more per month on air fresheners because the firm pollutes the air. You could move to another house far enough away from the factory, but the rent for that house is $200 more than you now pay. The efficient solution to this problem is that
A. the factory owner should reimburse you $100, the difference between your expenses and the higher rent on the new house. B. you should move to the new house because the additional rent on that new house is less than the additional expenses you incur from living next to the factory. C. the firm should be able to continue to pollute because only one person is being harmed by the factory's pollution. D. the factory owner should compensate you $300 so that you can pay for the additional expenses you incur.