Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If the Chicago-Atlanta round-trip air fare were $350, should you use the coupon to go to Miami?
A. Yes, your economic surplus would be $400.
B. Yes, your economic surplus would be $50.
C. No, your economic surplus would be ?$100.
D. No, your economic surplus would be ?$50.
Answer: B
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Farmer Ted owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?
a. The price of cotton went down. b. The physical productivity of the land went up. c. Taxes on the land went up. d. The price of cotton went up.
Refer to the given data. At an income level of $400 billion, the average propensity to save in economy (2) is:
Answer the question on the basis of the following consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars.
A. .9125.
B. .0725.
C. .0875.
D. .9305.