The slope of a budget line:
a. is the negative of the price ratio, -PX/PY
b. depends on income.
c. depends on preferences.
d. is positive.
QUESTION 2As the total quantity of land is fixed the payment for land is termed as economic rent.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3If the demand for cream cheese produced by a dairy is perfectly elastic, then:
a. the demand curve will be vertical.
b. the demand curve will be horizontal.
c. the demand curve will be upward sloping.
d. the demand curve will be downward sloping.
e. the demand curve will initially slope upward and then slope upward.
QUESTION 4The marginal rate of substitution is:
a. the total amount a consumer is willing to trade to get another good.
b. the rate at which the consumer is willing to trade one good to gain one more unit of another good.
c. is reflected by the slope of the indifference curve.
d. characterized by both b. and c.
QUESTION 5If a particular factor has a specific use, its transfer earning is very high.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6A 0.5 increase in the price of a particular product causes the quantity demanded of the product to drop to zero. This means that the price elasticity of demand for the product is:
a. perfectly elastic.
b. unit-elastic.
c. perfectly inelastic.
d. moderately elastic.
e. moderately inelastic.
QUESTION 7Indifference curves typically
a. cross each other.
b. have a positive slope.
c. are convex from the origin.
d. are concave from the origin.
QUESTION 8Transfer earning is the minimum amount that has to be paid to a factor to allocate it in its next best alternative use.
a. True
b. False
Indicate whether the statement is true or false
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