The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner fell?
A) It would rotate inward around the vertical intercept, 10 lobster dinners.
B) It would rotate outward around the vertical intercept, 10 lobster dinners.
C) It would rotate inward around the horizontal intercept, 20 steak dinners.
D) It would rotate outward around the horizontal intercept, 20 steak dinners.
Ques. 2According to social interest theory, ________.
A) price regulations are unconstitutional
B) regulation helps markets achieve efficiency
C) monopoly practices last forever
D) unregulated firms try to avoid creating deadweight loss
Ques. 3The loan market is in equilibrium. If the demand for land decreases, the rental rate of land ________.
A) might rise or fall
B) rises
C) falls
D) remains unchanged
Ques. 4What is private information and what problems does it create?
What will be an ideal response?
Ques. 5A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?
What will be an ideal response?
Ques. 6Jane spends her monthly dining-out budget of 300.00 on either steak or lobster dinners. Using the above figure, what is the opportunity cost of a lobster dinner in terms of steak dinners?
A) 0.5 steak dinners per lobster dinner
B) 2.0 steak dinners per lobster dinner
C) 5.0 steak dinners per lobster dinner
D) 10.0 steak dinners per lobster dinner
Ques. 7Jane's Copy Services is in perfect competition. Jane currently charges 10 cents per page, which is the going market price.
Jane thinks that she can increase her profit if she lowers her price to 8 cents per page to increase the demand for her service. Is Jane right? Why or why not?
Ques. 8When would a risk averse individual not insure a risky event?
What will be an ideal response?
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