Richard is consuming X and Y so that he is spending his entire income and MUx/Px = 6 and MUy/Py = 10. To maximize utility, he should
A. continue to consume the same amount of X and Y since he is already maximizing utility.
B. consume less of both X and Y.
C. consume less X and more Y.
D. consume more X and less Y.
Answer: C
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Which of the following statements is false?
A. Another term for a Treasury bill is a T-bill. B. Treasury notes mature in 2 to 10 years. C. Treasury bonds are considered very safe investments, but Treasury bills are considered to be a more risky investment. D. It is unlikely the federal government will default on its bond obligations.
An individual who desires the most liquid asset possible will hold
A) currency. B) a savings account. C) checkable deposits at a bank. D) U.S. government bonds.
Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. What is the new long-run equilibrium quantity?
A. 50 B. 60 C. 100 D. 120
Which of the following observations is true of subsidies? a. They act as barriers to trade
b. They reduce the amounts of actual labor, raw material, and capital costs of production. c. They are capable of distorting trade patterns. d. They reduce inefficiencies.