The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating inward and not changing its vertical intercept?
A) a decline in his preference for coffee
B) a fall in the price of a gallon of gasoline
C) a decrease in Sam's income
D) an increase in the price of a pound of coffee
Ques. 2In September 2007, Regions Bank held 3 million in reserves against M1 deposits and made 83 million in loans. Between September 2007 and September 2008, deposits decreased from 114 million to 95 million.
If Regions Bank wants to maintain its desired reserve ratio in 2008, it will A) increase its reserves.
B) definitely make more loans.
C) cannot make more loans.
D) decrease its reserves.
Ques. 3Efficiency in the provision of a public good is achieved when its
A) total social benefit equals its total social cost.
B) average social benefit equals its average social cost.
C) marginal social benefit equals its marginal social cost.
D) marginal social benefit equals zero.
Ques. 4In the figure above, Joe is producing at point A. Joe's opportunity cost of producing one shirt is
A) 5/3 of a pair of pants per shirt.
B) 3/5 of a pair of pants per shirt.
C) 5 pairs of pants per shirt.
D) 2 pairs of pants per shirt.
Ques. 5In the figure above, when the quantity of milk produced is 600 gallons per day, what is the deadweight loss?
A) 250
B) 125
C) 500
D) 50
Ques. 6The increase in the demand for widgets, shown in the figure above, is the result of an increase in income. Therefore, widgets
A) are a normal good.
B) are an inferior good.
C) are elastically demanded.
D) are inelastically demanded.
Ques. 7Bobby spends 100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is 10 and the price of a CD is 20. Bobby currently buys 2 pizzas and 6 CDs.
To maximize his utility in the next period, he should A) buy more pizza and fewer CDs.
B) buy more CDs and fewer pizza.
C) buy more of both goods.
D) stay with the current combination of goods.
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