Consider a graph on which one good Y is on the vertical axis and the only other good X is on the horizontal axis
On this graph the income-consumption curve has a positive slope for low incomes, then it takes a zero slope for a higher income, and then it takes a negative slope for even higher incomes (the curve looks like an arc, first rising and then falling as income increases). This curve illustrates that, for all income levels, A) both X and Y are normal.
B) only Y is normal.
C) both X and Y are inferior.
D) only X is normal.
D
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A public good
A. is available to all and cannot be denied to anyone. B. is characterized by rivalry and excludability. C. can be profitably produced by private firms. D. produces no positive or negative externalities.
Refer to the figure above. Other things remaining the same, assume that the individual now has a higher opportunity cost of time. Which of the following statements is true in this context?
A) Optimization in levels will not lead to an efficient outcome. B) The cost curve will move u
Oscar consumes only two goods, X and Y. Assume that Oscar is not at a corner solution, but he is maximizing utility. Which of the following is NOT necessarily true?
A) MRSxy = Px/Py. B) MUx/MUy = Px/Py. C) Px/Py = money income. D) Px/Py = slope of the indifference curve at the optimal choice. E) MUx/Px = MUy/Py.
Wendell just read an article that says scientists have proven that processed cheese food increases brain power. We would expect Wendell's demand for processed cheese food to:
A. increase and shift to the right. B. increase and shift to the left. C. decrease and shift to the right. D. decrease and shift to the left.