Adam makes 25,000 per year and Bob makes 45,000 a year, and they both have the same marginal benefit curve. According to the utilitarian view, if a dollar is transferred from Bob to Adam, then
A) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative.
B) Adam's marginal benefit increases by more than Bob's marginal benefit decreases.
C) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero.
D) Adam's marginal benefit decreases by more than Bob's marginal benefit increases.
Ques. 2Which of the following results in a parallel shift outward of your indifference curves between gasoline and movie rentals?
A) any decrease in the prices of gasoline and movie rentals
B) an equal percentage decrease in the prices of gasoline and movie rentals
C) an increase in your income
D) none of the above
Ques. 3A chemical factory and a fishing club share a lake. Producing chemicals creates water pollution that harms the fish. Initially the lake is owned by no one.
Keeping in mind the Coase theorem, suppose transactions costs are low and the fishing club is given ownership of the lake. Compared to the situation with no property rights, the quantity of chemicals produced A) will decrease.
B) will stay the same.
C) will increase.
D) changes, but the direction of the change is ambiguous.
Ques. 4Cindy's Sweaters' production function is shown in the above table. Cindy rents two knitting machines for 30 a day each and hires workers at a wage rate of 40 a day.
If Cindy produces 20 sweaters per day, what is her average fixed cost of production? A) 3.00
B) 3.33
C) 8.00
D) 11.00
Ques. 5Lucy works as a college instructor for a fixed annual salary of 30,000. She is considering quitting this job and becoming a real estate broker.
Lucy believes that as a realtor she has a 40 percent chance to make 60,000 per year and a 60 percent chance to make 25,000 a year. The figure above shows Lucy's total utility of wealth curve (U). Lucy will decide to ________ and she will definitely make this choice because it gives her a greater expected ________. A) keep her current job; income
B) keep her current job; utility
C) quit her job and become a realtor; utility
D) quit her job and become a realtor; income
Ques. 6A market with one or a small number of firms but no barriers to entry is known as
A) a natural monopoly.
B) a contestable market.
C) a perfectly competitive market.
D) monopolistic competition.
Ques. 7If more firms enter a market that initially had 20 firms in it, then the Herfindahl-Hirschman Index will ________.
A) increase
B) decrease
C) not change
D) change in an unpredictable direction
Ques. 8Joshua consumes only apples and bread and is in consumer equilibrium. Joshua reads that eating bread is healthy, so his total utility from each loaf of bread increases. At his new consumer equilibrium Joshua would consume
A) more apples and less bread.
B) fewer apples and more bread.
C) some combination of apples and bread corresponding to a lower ratio of the marginal utility of bread to the marginal utility of apples.
D) the same quantity of apples and the same quantity of bread.
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