If foreigners decide to increase their investments in the U.S., this will cause
a. an appreciation of the dollar and foreign goods to become cheaper
b. a depreciation of the dollar and U.S. goods to become cheaper
c. a favorable balance of trade and an appreciation of the dollar
d. a devaluation of the dollar and a favorable balance of trade
e. a surplus in the current account
A
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Other things being equal, the less elastic demand is: a. the lower the deadweight loss is resulting from the imposition of a given tax on a product. b. the greater the burden is of the tax borne by consumers
c. the greater the tax revenue collected by the government is. d. all of the above
John is a seller in an affiliated-values auction environment where bidders are risk neutral. Which auction yields John the greatest expected revenue?
A. English B. Second price C. First price D. All of the choices are revenue equivalent.
Suppose Gina and Henry play two rnds of the ultimatum game. In the first round they play for $10; in the second round they play for $1,000. In the first round Gina suggests an 80/20 split ($8 to Gina, $2 to Henry), but Henry quickly rejects the offer as
unfair. Assuming Gina is interested in gaining financially from the experience and that she understands behavioral economics, we would expect her to: A. offer the same relative split ($800/$200), knowing that Henry will accept the offer because the dollar amount he would forgo by rejecting it is substantial. B. offer a more unequal split ($900/$100) in order to gain more for herself and figuring Henry will accept the split because $100 is better than nothing. C. offer a more equal split ($700/$300) to increase the probability that Henry will accept the offer. D. offer Henry more than half of the pot to ensure acceptance of the offer.
Consider an unregulated monopoly in Figure 8.13. If that monopoly sets its price equal to its marginal cost, it would:
A. earn negative profits. B. earn maximum profits. C. earn zero profits. D. earn small, but greater than zero, profits.