Question

10. According to the efficient markets hypothesis, *

in the short run, it is best to buy high and sell low.

anyone can outperform the stock market indices (indexes).

no investor can regularly outperform the stock market indices (indexes).

when one investor outperforms a stock market index, another investor will underperform that index.

11. All important information about the use (value) of a good is captured *

in its price.

by a central planner.

in its ceteris paribus.

by the Federal Trade Commission.

12. In relation to a bundle of two products where the prices have not changed, if a budget constraint increases, then the consumer can afford *

less of both products.

the same amount of both products.

more of both products.

cannot be determined, because information about indifference curves is needed

13. When are hourly rates preferred to piece rates? *

When employees demand it

When it is difficult to measure output

When wage equality isn't very important

When one person is much better than the rest

14. Which of the following best illustrates the concept of diminishing marginal utility? *

Elton likes carrots more than Mariah. Mariah gets less utility from carrots than Elton.

Whitney likes cashews more than Billy. Whitney gets more utility from cashews than Billy.

Tina is hungry and the first piece of chocolate she eats tastes great. Although she enjoys her fifth piece of chocolate, it does not taste as great.

Taylor likes hamburgers, but the price she is willing to pay for them is low compared with higher end foods, such as steak and lobster.

15. Non-monetary incentives are *

not important and should not be used.

not important, but are often used.

important, but should not be used.

important and should be used.

16. When a speculative bubble bursts *

unemployment usually decreases.

there is a "boom" in the overall economy.

the effects are contained only in that specific market.

people feel worse off because of lower stock prices and often spend less.

17. Speculation is *

wondering about the meaning of life.

a disruption of the normal market mechanism.

the attempt to profit from future price changes.

ignoring price signals and guessing randomly (wildly) about the future.

18. The difference between what buyers pay for a unit of a good and what sellers receive is known as the *

brokerage fee.

tax (tax wedge).

cost of production.

interest (interest rate).

Answer 1

Ques 10 when one investor outperforms a stock market index, another investor will underperform that index.

EMH states that usually one gains and the other investor looses to keep the average at median.

Ques 11 in its price.

With an increase in value, price of good rises and vice versa. So price stores major information of a product’s value.

Ques 12 less of both products.

With lesser budget and same prices of goods, we’ll be able to but less of both products.

Ques 13 When it is difficult to measure output

The hourly rates do not need measure of output whereas piece rate is based on outputs. So When it is difficult to measure output we use hourly rate.

Ques 14 Tina is hungry and the first piece of chocolate she eats tastes great. Although she enjoys her fifth piece of chocolate, it does not taste as great.

Marginal Utility states with every increase in a unit consumed of a good, the utility received falls. Which can be corresponded by the statement.

Ques 15 important and should be used.

Non-monetary incentives are good financially for the motivator as they do not raise the cost burden and are also seeked by individuals. An individual has both monetary and non-monetary needs and so it is important and should be used.

Ques 16 people feel worse off because of lower stock prices and often spend less.

This is so because the people’s positive speculation has gone awry and so they feel worse off and spend less

Ques 17 the attempt to profit from future price changes.

Speculation is done to gain from the price changes or save from losses.

Ques 18 brokerage fee.

This is the sale amount which the broker gets for his efforts.