The graphs below show an economy of two people with identical incomes in two years. They have different preference patterns as shown. 
What will happen in the market to bring about equilibrium?
What will be an ideal response?
The interest rate will fall rotating the budget line counterclockwise around the bundle of money each person has until the person on the left borrows the exact amount that the person on the right chooses to save. This will require slight adjustments of the indifferences curves as well.
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Suppose a plaintiff hires a lawyer to represent her in a court case. The lawyer will be paid by the hour. Under this contract,
A) production efficiency is not achieved. B) the client bears all of the risk. C) the lawyer has an incentive to lie about his hours worked. D) All of the above.
The characteristics of a market that influence the behavior of market participants is (are) known as
a. perfect competition b. market power c. barriers to entry d. market structure e. monopolistic competition