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One thousand euros given to you a year from now is worth to you today if the relevant

One thousand euros given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.  

A. €1000

B. €1100

C. €909

D. €900

22.In a diagram, consumer surplus is always represented by the area:  

A. between the demand curve and the supply curve

B. between the demand curve and the price

C. below the demand curve

D. above the demand curve

23.If the demand function for apples is P = 1 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?  

A. 25

B. 5

C. 20

D. 12.5

24.In analysing the tax and rebate policy discussed in the text, the final solution illustrates that:  

A. the income effect of the price increase is eliminated.

B. consumers do not cut back on fuel consumption

C. the government is made better off financially

D. social welfare increases

25.According to the analysis in your textbook, a school voucher program:  

A. increases the level of spending on education

B. decreases the level of spending on education

C. leaves the level of spending on education the same

D. forces some people to leave the public school system

26.According to the analysis in your text, a school voucher program:  

A. increases the quality of education

B. decreases the quality of education

C. does not affect education quality, but would make lower income families better off

D. increases the quality of education, but does not improve the welfare of low income families

27.Colin's demand for golf at his local club each season is P = 50 - 2Q. If the golf course charges €26 per round of golf, how much could it charge Colin in a membership fee before he would not play there?  

A. €1,250

B. €144

C. €288

D. €312

28.If you had a windfall of €5,000 in the present time period and you save some of it, your saving behaviour would likely be due to the fact that:  

A. your marginal utility of present income falls as your income goes up

B. the extra income changes the slope of your time preference indifference curves making then steeper

C. your indifference curves for present and future income are vertical

D. your indifference curves for present and future are horizontal

29.When a product depicted on the horizontal axis of a typical indifference curve model of behaviour is taxed:  

A. the budget line becomes steeper

B. the budget line becomes flatter

C. the indifference curve of the consumer shifts right

D. all the indifference curves of the consumer become steeper

30.If the demand function for city bus rides is P = 100 - 10Q and the present price of a ride is 50, then:  

A. raising prices will increase city revenue

B. raising prices will decrease city revenue

C. raising prices will not change city revenue

D. from the information given it is not clear what would happen to city revenue if price is increased

Feb 11 2020 View more View Less

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