Carlos can buy either sushi or eggrolls. If the prices of sushi and eggrolls triple and so does Carlos's money income, we can deduce that Carlos's budget constraint will
A. swivel in so that the slope of the budget constraint is tripled.
B. shift out but remain parallel to the old one.
C. shift in but remain parallel to the old one.
D. remain unchanged.
Answer: D
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A uniform abatement standard (AST) is also being considered across the State of California of 300 units. Use the criterion of allocative efficiency to support or refute this alternative.
Los Angeles County has the worst urban air quality across all major metropolitan areas in the United States. Automobile emissions contribute significantly to this problem. Assume the California Air Resources Board is consideringwhether to set a uniform emission standard or a regionally-based emission standard, where one standard is set for Los Angeles County and another for the rest of the state. Marginal social benefits (MSB) and marginal social costs (MSC) for the two regions have been estimated as follows: MSBabatement in LA County = 500 ?0.75A MSBabatement in the rest of California = 150 ? 0.25A MSCabatementin all of California = 0.5A, where A is the level of abatement of automobile emissions, and MSB and MSC are in millions of dollars.
Suppose Ralph sells bento lunches, which have the following demand:
pR = 100 – qR – 0.5qD where pR is the price of Ralph's bentos and qR is the number of bentos Ralph sells. qD is the number of bentos Ralph's rival, Dave, sells. Dave's demand is given by: pR = 100 – qD – 0.5qR where pD is the price Dave can sell his bentos for. Suppose each seller has a cost per unit (average and marginal) of $1. a. How does this game differ from the Cournot model with identical products? Why do the demand curves indicate that the goods are differentiated – not perfect substitutes for one another? b. Compute the best response functions for each seller and the Nash Equilibrium outputs and prices.
When consumers face rising gasoline prices, they typically
a. reduce their quantity demanded more in the long run than in the short run. b. reduce their quantity demanded more in the short run than in the long run. c. do not reduce their quantity demanded in the short run or the long run. d. increase their quantity demanded in the short run but reduce their quantity demanded in the long run.
When consumers maximize utility, they are equating the ratio of marginal utility to price across all goods consumed.
Answer the following statement true (T) or false (F)