Suppose that the quantity of hamburgers is measured along the vertical axis and that the number of bags of popcorn is measured along the horizontal axis. The budget constraint has a vertical intercept of 10 hamburgers, and the slope of the line is -1. If the price of popcorn doubles, we know that
A. the vertical axis of the budget line shifts to 5 hamburgers.
B. the consumer will buy half as many bags of popcorn as before.
C. the new equilibrium will have a marginal rate of substitution of -2.
D. the new equilibrium will have a marginal rate of substitution of -0.5.
Answer: C
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Southwest Airlines wants to raise $20 million to finance the renovation of their corporate offices, and the company wishes to raise the funds through direct finance. Which of the following methods could it use?
A) It could issue $20 million in stocks. B) It could sell $20 million in bonds. C) It could borrow $20 million from a bank. D) It could choose either A or B.
Which of the following statements best describes equilibrium?
a. The area above the point where the supply curve (S) and the demand curve (D) cross is called the equilibrium. b. The area below the point where the supply curve (S) and the demand curve (D) cross is called the equilibrium. c. The point where the supply curve (S) and the demand curve (D) cross is called the equilibrium. d. Any point above where the supply curve (S) and the demand curve (D) cross is called the equilibrium.
Price levels rarely remain the same. This implies that money is
A. an excellent medium of exchange. B. divisible. C. a good medium for measuring value. D. an imperfect medium for storing value.
Trade restrictions tend to make domestic products
A) cheaper because they do not have to compete with foreign goods. B) cheaper because they do have to compete with foreign goods. C) more expensive because they have to compete with foreign goods. D) more expensive because they do not have to compete with foreign goods.