Refer to the information provided in Figure 1.5 below to answer the question(s) that follow.
Figure 1.5Refer to Figure 1.5. As income decreases, consumption decreases by a decreasing amount. If consumption is graphed on the vertical axis and income is graphed on the horizontal axis, the relationship between consumption and income would look like which of the following Panels?
A. A
B. B
C. C
D. D
Answer: B
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If a seller charges a buyer the exact price the buyer is willing to pay, then the buyer would
A) not buy the good. B) receive the maximum consumer surplus. C) receive no benefit from the good. D) receive no consumer surplus from that unit of the good. E) suffer a deadweight loss from buying the good.
Refer to Table 2-7. What is Mickey's opportunity cost of making a hat?
A) 1/10 of an umbrella B) 1/5 of an umbrella C) 5 umbrellas D) 10 umbrellas
The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:
A) treasury bill rate. B) federal funds rate. C) prime interest rate. D) none of the above.
All mutually beneficial trades have taken place. This implies that
A. economic efficiency prevails in the society. B. society is on the constant cost portion of its production possibilities curve. C. the production possibilities curve is bowed out. D. society is inside the production possibilities curve.