Use the graph above to answer the following question. What can we conclude about the attitude towards risk this individual is portraying given this utility function?
What will be an ideal response?
The marginal utility of income is constant for all income levels. This would imply that the person is risk neutral.
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Refer to Figure 24-1. Ceteris paribus, an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
What is the main reason for changes in GDP in the short run?
What will be an ideal response?
If the players in the figure shown act in their own self-interest, then we know that Dunkin Donuts will earn:
This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.
A. $2 million.
B. $1 million.
C. $2 million.
D. $0 million.
For a renter, the income effect of an increase in apartment rents will
a. have a greater effect than the income effect of an increase in the price of chewing gum b. have no impact on the demand curve for apartments, because everything except price is assumed constant c. have less of an effect than the income effect of an increase in the price of chewing gum d. be almost negligible, because housing is a necessity e. occur only when income increases