Refer to Figures d and e. Bundle A is preferred to bundle B in Figure e and not in Figure d because:
A. the MRS between water in a rainy season and during a drought is higher in e than in d.
B. as the probability of a drought increases, consumers are no longer indifferent between the two bundles.
C. as the probability of a drought decreases, water in a rainy season becomes less valuable.
D. consumers are indifferent between bundles A and B as the probability of a drought increases.
B. as the probability of a drought increases, consumers are no longer indifferent between the two bundles.
You might also like to view...
Which of the following conditions holds in an economically efficient competitive market equilibrium?
A) Producer and consumer surplus are exactly equal in size. B) There are no positive and no negative external effects from consumption and production. C) The deadweight loss is positive but at a minimum. D) The marginal benefit of the last unit produced and consumed is maximized.
The multiplier effect is the series of ________ increases in ________ expenditures that result from an initial increase in ________ expenditures
A) autonomous; consumption; induced B) autonomous; investment; induced C) induced; consumption; autonomous D) induced; investment; autonomous
Refer to Figure 4.3. All else equal, an increase in the government's budget deficit accompanied by a decrease in corporate taxes would cause which of the following shifts?
A) S1 to S2 and D1 to D2 B) S2 to S1 and D1 to D2 C) S1 to S2 and D2 to D1 D) S2 to S1 and D2 to D1
Externalities are failures of
A. the market to correctly price resources. B. firms and consumers to make rational tradeoffs. C. firms to make rational tradeoffs. D. consumers to make rational tradeoffs.