What term is defined as the change in the amount consumers will buy because they can buy a different product instead?
a. inferior goods
b. normal goods
c. income effect
d. substitution effect
Ans: d. substitution effect
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Rapid inflation makes holding a large amount of money: a. wiser, because you will generally need more and more to buy the goods and services you want. b. less wise, because the opportunity cost of holding money is high
c. less wise, because someone might steal it, or it might be destroyed. d. wiser, because the opportunity cost of holding money is high.
Annual incomes of James, Jack, and Stanley are $30,000 . $50,000 . and $80,000 and their tax rates are 10%, 20%, and 30% respectively. Which tax structure is this an example of?
a. Proportional tax b. Progressive tax c. Regressive tax d. Digressive tax
Use the following statements to answer this question:
I. If the extent of a market is broader, it is less likely that firms in the market can influence the market price. II. In determining whether two different products belong to the same market, it is necessary to know whether the two products can be used as substitutes for each other. A. I and II are both true. B. I is true, and II is false. C. I and II are both false. D. I and II are both false.
The seller of a put option is transferring the risk:
A. this statement is incorrect since only sellers of call options are transferring risk. B. of a price increase of the stock to the buyer of the option. C. this statement is incorrect since options do not transfer risk. D. of a price decrease of the stock to the buyer of the option.