Which of the following statements is true about a downward-sloping demand curve that is a straight line?
A. The slope remains the same, but elasticity rises as you move down the demand curve.
B. The slope remains the same, but elasticity falls as you move down the demand curve.
C. The slope and the elasticity fall as you move down the demand curve.
D. The slope and the elasticity are the same at all points.
Answer: B
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Consider the following simplified sequence of exchanges. A farmer sells wheat to a miller, for 25 cents. The miller grinds the wheat into flour, and sells that to a baker, for 35 cents
The baker turns the flour into a loaf of bread, which she sells to a grocer for 60 cents. The grocer then sells you the loaf of bread for 85 cents. What can we conclude? A) Your purchase of the bread avoided the use of a middleman. B) The grocer's profit means you lost on the deal. C) GDP increases by 25 cents. D) GDP increases by 85 cents. E) GDP increases by $2.05.
Assume the graph shown represents Grace's budget constraint. Which of the following is true?
A. Grace's total utility is constant along her budget constraint. B. Grace's total expenditure is constant along her budget constraint. C. Grace's marginal utility of each good is the same for each combination of goods on her budget line. D. Grace is indifferent between consuming any bundle that lies on the budget constraint.
Kevin Freeman is the head of a team developing plastic knee replacements. Each member of the team brings specialized knowledge to the innovation process. Kevin noticed that the specialist on bone and artificial materials compatibility is always late to meetings and contributes little. This is an example of the
A. costs of employee buy-in. B. free-rider problem. C. costs of collective-action problems. D. benefits of the use of dispersed specific knowledge.
Refer to the budget line shown in the diagram. If the consumer's money income is $20, which of the following combinations of goods is unattainable?
A. 4 units of C and 6 units of D.
B. 5 units of C and no units of D.
C. 1 unit of C and 8 units of D.
D. 2 units of C and 6 units of D.