If price of a product falls
A. the budget line rotates to the right.
B. the budget line rotates to the left.
C. the marginal utility of the product also falls.
D. the indifference curve will shift to the left.
Answer: A
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A fiscal stimulus works to close a recessionary gap by shifting the
A) AD curve leftward. B) AS curve leftward. C) AD curve leftward and AS curve leftward. D) AD curve rightward. E) potential GDP line leftward.
What is required for a positive externality to occur?
A) The full benefits of an action aren't taken into account. B) The intention or plan to directly help other people C) A concern for social welfare D) Courtesy and honesty E) All the above.
Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda
A) will increase and she'll buy more soda. B) will decrease and she'll buy fewer sodas. C) will decrease and she'll buy more pizza. D) Both B and C are correct.
Collusion makes firms better off because if they act as a single entity (a cartel) they can reduce output and increase their prices and profits. But some cartels have failed and others are unstable
Which of the following is a reason why cartels often break down? A) Most cartels do not have a dominant strategy. B) Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement. C) Members of a cartel may resent having to share their profits equally. D) When a cartel is profitable the amount of competition it faces increases.