Suppose that choice sets are convex. State assumptions about tastes that are necessary and sufficient to guarantee that the solution to the consumer optimization problem is a unique interior solution. (Explain)
What will be an ideal response?
To rule out corner solutions, it is necessary and sufficient to assume that all goods are essential. To rule out multiple interior solutions, it is necessary and sufficient to assume that tastes are (strictly) convex. While these assumptions are not necessary for the solution to be a unique interior solution, they are necessary to guarantee that the solution to be unique and in the interior.
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Which of the following statements is not accurate about the 1920s?
a. There was a significant increase in mass production and mass marketing. b. There was a significant increase in urbanization. c. The ability of many Americans to afford consumer goods dropped sharply. d. Consumer credit policies were developed and instituted on a large scale for the first time.
The more elastic the demand for a good,
a. the more of an excise tax is that is collected by sellers b. the more of an excise tax that is paid by buyers c. the more an excise that is paid by sellers d. the more elastic the supply of that good e. the smaller the burden of a tax on that good
When we draw an investment demand curve, we hold constant all of the following except:
A. the expected rate of return on the investment. B. business taxes. C. the interest rate. D. the present stock of capital goods.
Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.
Figure 6.1Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hamburger
A. is 1/4 of a hot dog. B. is 1/2 of a hot dog. C. is 2 hot dogs. D. changes as you move down along the budget constraint.