The above figure shows Katie's consumption possibilities. The relative price of a movie ticket is
A) 1 restaurant meal.
B) 0.25 restaurant meals.
C) 4 restaurant meals.
D) 2 restaurant meals.
B
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What is a compensating differential?
What will be an ideal response?
Tom carries on loud cellphone conversations in public places. He values such conversations at $1 per minute. Steve prefers piece and quiet. He would pay $2 per minute to avoid overhearing Tom's conversations. In this situation
a. Tom should quit using his cellphone because that would be a Pareto improvement b. Tom should quit using his cellphone because that would be efficient c. If Steve made a side payment of $3 to Tom, that would be a Pareto improvement d. If Steve paid Tom 50 cents per minute to quit talking, that would be a Pareto improvement e. If Steve paid Tom $1.50 per minute to quit talking, that would be a Pareto improvement