Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
After trade, at a world price of Pw, the net gain of total economic surplus equals area(s)
A. B + C + E + F.
B. B + C.
C. A.
D. E + F.
Answer: D
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Assume that a security has equally possible outcomes of yielding 8 percent and 4 percent. The standard deviation of the probability distribution of returns for this security is
A) 6 percent. B) 4 percent. C) 3 percent. D) 2 percent.
If the exchange rate changes from $1.52 = £1.00 to $1.65 = £1.00, then relative to each other,
A) both the dollar and the British pound have appreciated. B) both the dollar and the British pound have depreciated. C) the dollar has appreciated and the British pound has depreciated. D) the dollar has depreciated and the British pound has appreciated.
If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the
a. consumer has consumer surplus of $5 if he buys the good. b. consumer does not purchase the good. c. price of the good will rise due to market forces. d. market is out of equilibrium.
Consumer theory provides the foundation for understanding demand curves because
a. each point on a demand curve represents an optimal choice point. b. consumers purchase more inferior goods than normal goods. c. increases in income cause the budget constraint to rotate inward along one axis, which changes the consumer's purchases. d. increases in income cause the budget constraint to rotate outward along one axis, which changes the consumer's purchases.