Indirect utility functions are homogeneous of degree 1 in income.
Answer the following statement true (T) or false (F)
False
Rationale: This would imply that we can always increase income by a factor k and expect the consumer to get k times as much utility. But that would depend on how we measure utility, and there are lots of ways to measure utility that will make this not true for any set of preferences.
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Firms that extend credit to borrowers using funds from raised from savers are called:
A. financial intermediaries. B. stock brokers. C. bond dealers. D. central banks.
According to Ricardo, a country will have a comparative advantage in the product in which its
A) labor productivity is relatively low. B) labor productivity is relatively high. C) labor mobility is relatively low. D) labor mobility is relatively high. E) labor is outsourced to neighboring countries.
If people have a sudden increase in confidence in the open economy of the U.S. and want to invest there, the interest rate:
A. increases, as NCO increases. B. falls, as NCO falls. C. falls, as NCO increases. D. increases, as NCO decreases.
Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB(QB, QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG(QB, QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG + QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. How would the profit-maximizing sales quantities for bats and gloves change if the price of bats was $270?
A. The quantities of bats and gloves will remain unchanged. B. The quantity of gloves will increase while the quantity of bats will decrease. C. The quantity of bats will increase while the quantity of gloves will decrease. D. The quantities of bats and gloves will both increase.