The criteria of Expected Monetary Value (EMV) is used for making decisions when
a. you are certain of the outcome.
b. you have no knowledge of possible outcomes.
c. you can assign a probability to each outcome.
d. all of the above
e. none of the above
d. all of the above
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Higher rates of unemployment are linked with:
A. greater political stability because the employed tend to be more politically active. B. higher crime rates as the unemployed seek to replace lost income. C. lower rates of heart disease as the unemployed have eliminated job stress. D. improvements in overall health as the unemployed have more leisure time to be physically active.
Consider a consumer who consumes only 
and 
. The price of 
falls.
a. On a graph
with 
on the horizontal and 
on the vertical axis, illustrate the change in this consumer's budget constraint assuming exogenous income I.
b. Illustrate income and substitution effects for 
assuming that both goods are normal.
c. Can you tell whether the cross-price demand curve for 
is upward or downward sloping?
d. Suppose 
is leisure hours and 
is a composite consumption good. Consider an increase in the wage assuming a fixed endowment of leisure (and no exogenous source of income). How is your graph similar and how is it different from what you graphed in (a) through (c)?
e. Is the leisure-demand curve a cross-price demand curve? Why or why not?
What will be an ideal response?