Kristen has an income of $450 per year to spend on music CDs and movies on DVDs. The price of a CD is $15 and the initial price of a DVD is $22.50. The indifference curves in the figure above (I1, I2, and I3 ) reflect Kristen's preferences
If the price of a DVD falls to $18, the income effect on Kristen's consumption of DVDs ________ the substitution effect, so a DVD is ________ good. A) partly offsets; an inferior
B) partly offsets; a normal
C) reinforces; an inferior
D) reinforces; a normal
D
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Consider a large public university in which a chemistry lecture is usually attended by 300 students or so but with large amounts of available seats on any given day
Is this a pure public good? If not, why not? Is this good likely to be provided in an efficient manner if the professor is vigilant in making sure that only registered students attend? Explain.
Which of the following is not true regarding bonds? a. Bonds can be purchased from corporations as well as governments
b. Interest must be paid to bondholders before dividends are paid to stockholders. c. Bondholders face no risk from changing market interest rates on bonds that have a fixed interest rate. d. The capital gains on bonds are generally more limited than the capital gains on stocks.