Alice has $10 to spend on wine and cheese. If wine is $2.50 a glass and cheese $2, draw the corresponding budget line. Then draw three indifference curves, one showing the amount of wine and cheese Alice would choose, one showing less preferred combinations of wine and cheese, and the last showing preferred but unaffordable combinations.
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What will be an ideal response?
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After eating four slices of pizza, you are offered a fifth slice for free. You turn down the fifth slice. Your refusal indicates that the
A. marginal benefit for the fifth pizza slice is less than its marginal cost. B. marginal benefit for the fourth pizza slice is negative. C. total benefit for the fifth pizza slice is negative. D. marginal benefit for the fourth slice is the largest among all slices.
In the figure above, if the firm is regulated using a marginal cost pricing rule, the consumer surplus created is equal to the area of
A) ABG. B) ACF. C) BCFG. D) BCE. E) None of the above because there is no consumer surplus created.
A restaurant owner hires a waiter to serve food to customers and clear the tables. The owner wants the waiter to be prompt in bringing out the food and clearing the table once the guests are finished with their meal. The waiter is paid a salary and cannot accept tips. The waiter would prefer to check their Facebook account and take their time waiting the tables. If the waiter does spend
considerable time checking their Facebook while the owner is not at the restaurant, which of the following is true? A) This is an example of the lemons problem and the waiter is the agent and the owner is the principal. B) This is an example of the principal-agent problem and the waiter is the agent and the owner is the principal. C) This is an example of adverse selection and the waiter is the agent and the owner is the principal. D) This is an example of the principal-agent problem and the waiter is the principal and the owner is the agent.
Which of the following is false about the long run? a. The long-run equilibrium output for a firm in perfect competition occurs at the lowest point on the average total cost curve. b. The shape of the long-run supply curve depends on the extent to which input costs change when there is entry or exit of firms in the industry. c. In a constant-cost industry, the prices of inputs do not change as
output is expanded. d. In an increasing-cost industry, the cost curves of the individual firms rise as the total output of the industry decreases.