An individual derives utility from games, g (y-axis), and toy airplanes, a (x-axis), described by the utility function U(g,a) = g0.6a0.4. The price per game is $20 and the price of toy airplanes is $10. Using the slope of the income consumption curve (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200
A) Both goods are normal goods with an ICC slope of 3/4.
B) Both goods are normal goods with an ICC slope of 4/3.
C) Both goods are inferior goods with an ICC slope of -4/3.
D) Both goods are inferior goods with an ICC slope of - 3/4.
A
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Which of the following about Social Security is true?
a. All of the current revenues flowing into the Social Security system are needed for benefit payments to current retirees. b. If the Social Security surplus was used to pay down the privately held federal debt, this would reduce future taxes and, thereby, make it easier to deal with the retirement of the baby boomers. c. During the 1980s and 1990s, most of the social security surplus was used to reduce the national debt. d. When the Social Security surplus is used to cover the current operating expenses of the federal government, it will make it easier for future taxpayers to provide promised Social Security benefits to baby boomers.
Refer to the diagram. This production possibilities curve is constructed so that:
A. resources are presumed to be perfectly shiftable between bread and tractors.
B. the opportunity cost of bread diminishes as more bread is produced.
C. the opportunity cost of tractors increases as more bread is produced.
D. the opportunity costs of both bread and tractors increase as more of each is produced.