Harvey Miller owns a baseball that was hit for a home run by Ted Williams. Harvey, a long-time Boston Red Sox fan, recently refused to sell his baseball for $75,000 even though he would not have paid someone more than $10,000 for the baseball if he did
not already own it. Harvey explained his decision not to sell the baseball by noting that: "Ted Williams was my hero. This baseball has a great deal of sentimental value for me." Which of the following can explain Harvey's behavior?
A) the difference between implicit and explicit costs
B) the scarcity of home run baseballs hit by Ted Williams
C) the endowment effect
D) how social influences can affect consumption choices
Answer: C
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One role of the interest rate is to
A) allocate capital to its most efficient uses. B) redistribute income from the wealthy to the poor. C) reduce the rate of inflation by encouraging government borrowing. D) discourage saving and encourage current consumption.
A firm whose price is below its average cost:
a. is earning negative economic profit. b. is earning positive economic profit. c. is just breaking even. d. is earning zero economic profit. e. is earning zero accounting profit.
Suppose that a local supermarket sells apples and oranges for 50 cents apiece, and at these prices is able to sell 100 apples and 200 oranges per week. One week, the supermarket lowered the price per apple to 40 cents and sold 120 apples. The next week, they lowered the price per orange to 40 cents (after raising the price per apple back to 50 cents) and sold 240 oranges. These results imply that
the a. price elasticity of apples is lower than the price elasticity of oranges b. price elasticity of apples is higher than the price elasticity of oranges c. demand for apples is more price sensitive than the demand for oranges d. demand for oranges is more price sensitive than the demand for apples e. price elasticities of demand for apples and oranges are the same over these price ranges
Injections include all of the following except
A. Investment. B. Saving. C. Exports. D. Government spending.