Which of the following are true about functions in the duality picture:
A. Compensated demand functions are homogeneous of degree zero in prices.
B. Uncompensated demand functions are homogeneous of degree zero.
C. Expenditure functions are homogeneous of degree zero.
D. Both (a) and (b).
E. Both (b) and (c).
F. Both (a) and (c).
G. All of the above.
H. None of the above.
Answer: D
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The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the average total cost of producing 4,500 frijoles?
A) $2 B) $225 C) $9000 D) More information is needed to determine the answer.
Suppose a consumer spends his income on CDs and DVDs. If his income decreases, the budget constraint for CDs and DVDs will
a. shift outward, parallel to the original budget constraint. b. shift inward, parallel to the original budget constraint. c. rotate outward along the CD axis because he can afford more CDs. d. rotate outward along the DVD axis because he can afford more DVDs.