In a 2-good model, suppose that all individuals have tastes that are quasilinear in either good 1 or in good 2 (with some of each represented in the group.) The quasilinearity of everyone's tastes is then sufficient to insure that we can treat the group as if it were a single representative consumer.
Answer the following statement true (T) or false (F)
False
Rationale: Individuals whose tastes are quasilinear in good 1 would change only good 2 consumption as income changed, and individuals whose tastes are quasilinear in good 2 would only change their consumption of good 1as income changes. Thus, some redistributions of income within the group will cause the group bundle to change.
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All four market forms discussed in the text maximize profit where
a. P = MC. b. AR = AC. c. MR = MC. d. MC = AR.
Assume a country experiences heavy capital outflows. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions? Assume the exchange rate is stated as: (Domestic currency/Foreign currency)
a. Start the analysis in the foreign exchange market with demand shifting to the right. b. Start the analysis in the foreign exchange market with supply shifting to the left. c. Start the analysis in the foreign exchange market with supply shifting to the right. d. Start the analysis in the real credit market with demand shifting to the left. e. Start the analysis in the real credit market with demand shifting to the right.