In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur
A) inside the budget line.
B) outside the budget line.
C) on the budget line.
D) at the origin.
Ques. 2Information technologies ________ the demand for low-skilled labor, increase the ________ high-skilled labor, lower the wage rate of ________ labor, and raise the wage rate of ________ labor.
A) decrease; demand for; low-skilled; high-skilled
B) decrease; supply of; low-skilled; high-skilled
C) do not change; supply of; high-skilled; low-skilled
D) do not change; demand for; high-skilled; low-skilled
Ques. 3Iran called on OPEC in November 2008 to cut production by a further 1 million to 1.5 million barrels per day when it meets in Cairo later this month. Why would OPEC, a cartel, restrict production?
A) to decrease demand
B) to increase supply
C) to decrease quantity supplied
D) to increase profits
Ques. 4Rent seeking is devoted to the creation of
A) monopolies.
B) competitive industries.
C) human capital.
D) more elastic demand.
Ques. 5Jason hires Maria to tutor him in economics. Jason is willing to pay 30 for the first hour of tutoring, 25 for the second, 20 for the third, 15 for the fourth, and 10 for the fifth.
Maria has an opportunity cost per hour of 6 for the first, 9 for the second, 12 for the third, 15 for the fourth, and 18 for the fifth. What will be the equilibrium quantity of hours tutored and the equilibrium price? Explain why this quantity and price is the equilibrium. What is Jason's consumer surplus and what is Maria's producer surplus?
Ques. 6A student wrote: A production quota is inefficient because it results in overproduction.
At the quota quantity, marginal social cost is equal to the market price and marginal social benefit is less than the market price, so marginal social cost exceeds marginal social benefit. If you were the instructor, how would you correct this statement?
Ques. 7What kind of elasticity is relevant when you are trying to figure out how a price cut by the burger shop next door will affect the demand for your pizza? Explain.
What will be an ideal response?
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