Suppose your economics professor has an extra copy of textbook that he or she would like to give to a student in the class. Which of the following schemes is the most likely to result in an efficient outcome?
A. Auctioning off the textbook to the highest bidder.
B. Letting students take turns using the textbook.
C. Giving the textbook to the student who has the lowest midterm score.
D. Randomly selecting one student to receive the textbook.
Answer: A
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The above figure shows Bob's utility function. He currently has $50 and is considering investing all of it in an investment that has a 50% chance of being worth $100 and a 50% chance of being worth $0. Bob will
A) definitely make the investment because the expected utility of the investment exceeds the utility of his $50. B) definitely not make the investment because the expected utility of the investment is less than the utility of his $50. C) definitely make the investment because he is indifferent between having $50 and having an investment with an expected value of $50. D) definitely not make the investment because he is indifferent between having $50 and having an investment with an expected value of $50.
‘The U.S. tax code gives preferential treatment to investors in municipal bonds. This is an example of
a. a tax loophole. b. tax evasion. c. an administrative burden. d. tax enforcement.
Sealed bid construction contracts are examples of market games that are
A. simultaneous and nonrepeated. B. sequential and nonrepeated. C. sequential and repeated. D. simultaneous and repeated.
An increase in confidence will immediately shift
A. aggregate supply to the right. B. aggregate supply to the left. C. aggregate demand to the left. D. aggregate demand to the right.