Unbridled self-interest fails to coordinate resource flows most effectively in which of the following cases?
A. The production of a national defense system
B. The production of jazz songs
C. The production of computers
D. The production of baseball bats
The price of coffee has increased 10% percent since last year, and the quantity of coffee purchased has also increased 15 percent. Of the explanations below, which is most consistent with these facts?
a) The government has begun to subsidize (negative tax) the production coffee.
b) The coffee industry has apparently experienced significant cost savings in the past year, perhaps because of the availability of low-wage workers from overseas.
c) Coffee was previously subject to import quotas (which restricted supply), but the quotas were finally lifted last year.
d) Consumers have started to like coffee more and more.
Kryptonite producers increase the price of Kryptonite, and everything else is constant.
a) The demand curve for kryptonite will shift left.
b) The supply curve for kryptonite will shift right.
c) The quantity of kryptonite purchased will fall.
d) There will be an excess supply of kryptonite.
e) Both c, and d.
The market for Squeeky Klean brand hand sanitizer has supply and demand curves given by Qs = PSK - CM and Qd = 300 - 2PSK + PSub respectively. PSK = price of squeeky Kleen, PSub = Price of a substitute = $15, and CM = cost of machinery = $51. What quantity of hand sanitizer at what price will be sold in equilibrium?
a) P=88.67, Q=38.
b) P=122, Q=71.
c) P=183, Q=132.
d) None of the above.
The consumer earns stock dividends of D, has labor earnings equal to E, and receives T dollars from a trust fund. There are four goods available to her: w, x, y and z, at prices pw, px, py, and pz.
What is the amount of good z that she will choose to buy?
a) D + E + T = pww + pxx + pyy + pzz.
b) (D + E + T)/pz + U=3w+3x+3y+3z.
c) Total income, which equals D + E + T.
d) Answer cannot be determined without more information.
Mary Beth has decreasing marginal utility of goods Y and X is consuming on her budget line at point A. At point A, the slope of her indifference curve is larger (in absolute value) than the slope of the budget line (in absolute value). In order to maximize utility
A. Mary Beth will buy more of good X and less of good Y as she spends the same amount of money, and increases her utility.
B. Mary Beth will buy more of good Y and less of good X as she spends the same amount of money, and increases her utility.
C. As Mary Beth reallocates her income to buy a different mix of goods X and Y, moving away from point A, her marginal rate of substitution (absolute value) declines
D. Both A., and C. are correct.