The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select?
A) combination a because that contains all the gasoline he needs and still has some coffee
B) combination c because that contains all the coffee he needs and some gasoline
C) combination b because it is on his budget line and on the highest attainable indifference curve
D) none of the above
Ques. 2How are total and marginal utility related?
What will be an ideal response?
Ques. 3Suppose a perfectly competitive market is in a long-run equilibrium when a permanent decrease in the market demand occurs. In the long run, which of the following definitely occurs?
A) The price decreases.
B) The number of firms decreases.
C) The firms' marginal cost increases.
D) Marginal revenue increases.
Ques. 4Which of the following shifts the ATC curve upward at the XYZ Co?
A) an increase in the hourly wage that XYZ pays its workers
B) a decrease in the hourly wage that XYZ pays its workers
C) an increase in the fixed amount of liability insurance premiums that XYZ pays for its business
D) Both answers A and C are correct.
Ques. 5If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.
A) rises; increases
B) falls; decreases
C) rises; decreases
D) falls; increase
Ques. 6A copper ore refiner pollutes the water upstream from a brewery. These are the only two parties involved. The transactions costs of reaching an agreement between the refinery and the brewery are low.
The amount of water pollution will be at the efficient level A) only when the property right to the stream is assigned to the ore refinery.
B) only when the property right to the stream is assigned to the brewery.
C) when the property right to the stream is assigned to either the refinery or to the brewery.
D) when no one has clear property rights.
Ques. 7Most economists believe that raising the minimum wage decreases the employment opportunities for low-skilled workers.
Indicate whether the statement is true or false
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