Consider a competitive market where the demand and the supply depend on the current price of the good. Then fitting a line through the quantity-price outcomes will
A) give you an estimate of the demand curve.
B) estimate neither a demand curve nor a supply curve.
C) enable you to calculate the price elasticity of supply.
D) give you the exogenous part of the demand in the first stage of TSLS.
Answer: B) estimate neither a demand curve nor a supply curve.
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On a graph of the consumption function, where the consumption function crosses the 45 degree line,
A) there is no saving and no dissaving. B) disposable income is zero. C) the maximum level of disposable income is earned. D) there are no tax payments. E) induced consumption equals zero.
The World Bank approach to combating child labor stresses
(a) making child labor legal under certain conditions. (b) tackling the sources of poverty. (c) encouraging families to migrate to richer countries. (d) providing each child with a computer so that children have an alternative to working.