If both Ben and Catherine value good X more than good Y, a firm can increase profits by bundling the two products
Indicate whether the statement is true or false
False. The two demands are positively correlated. In this case it is more profitable to sell the two goods separately.
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Suppose that in most car collisions between cars of unequal size, the smaller car sustains the most damage and its occupants suffer the most injury. In answering the following question, assume that, on average, smaller cars generate less air pollution than larger cars and that every person in the economy drives at least one car. As the average size of cars increases, an individual's incentive to buy a smaller car:
A. increases in order to prevent injury to others. B. decreases because of the increased risk of injury in a collision. C. remains the same because car purchases depend on individual preferences. D. increases to offset the external cost of air pollution.
If banks were required to keep 100% of deposits in reserves, they could
A) make more loans. B) make no loans. C) create more deposits. D) only use required reserves for loans.
The quantity theory of money predicts that, in the long run, inflation results from the
A) velocity of money growing at a faster rate than real GDP. B) velocity of money growing at a lower rate than real GDP. C) money supply growing at a lower rate than real GDP. D) money supply growing at a faster rate than real GDP.
An individual holds $10,000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things being constant, we would expect
A) the individual's real wealth to decrease and consumption to decline. B) no change in the individual's real wealth but a decline in real national product. C) the individual's stock of real wealth to decrease but real national income to increase. D) the individual's wealth to increase.