Question

1. A Hicksian demand curve

a holds utility constant.
b. includes both the income and substitution effects.
c. flatter than a Marshallian demand curve.
d. is closer to a Marshallian demand curve for high-cost items

2. Why might an analyst chose to use weighted CBA?

a. The analyst can quantify impacts but not monetize them all.
b. The marginal utility of income is diminishing, and the policy or program will affect people in
different income groups
c. The analyst cannot determine the appropriate discount rate.
d. The policy or program has several goals or objectives,

3. Third parties in the private sector are most likely to provide information about a product when it is
a. a high-price good
b. an experience goods
C. a search good
d. a post-exp
good

4. You decide to accept a job with the Department of Health and Human Services. Seeking to impress
your new bess, you write a proposal for expanded state support for vaccination. After reading your
report, your boss exclaims:
a. "You idiot! This problem calls for anti-trust policy!"
b. "You idiot! This problem calls for marginal cost pricing
C "Great idea! Vaccines are a nonrivalrous good. If the government doesn't provide them, I'm
not sure if anyone will."
d. "Great ideal Vaccination provides benefits even to those people who don't participate in the
transaction. By providing support for them, we address a positive externality!"

5. An income change is illustrated by which of the following:
a. A rotation of the budget line.
b. A parallel shift of the budget line.
c The portion of the marginal cost curve above the average variable cost curve
d. The area under the demand curve and above the price line

Answer 1

1) holds utility constant

Hicksian curve deals only with substitution effect.

2) The analyst can quantify impacts but not monetize them all.

It's not possible to monetize each and every thing.

3) an experience good

The products which can only be evaluated after being experienced are experience goods. Like Beauty salon, restaurant etc.

Here, 3rd party will provide information based on the experience of previous customers.

4) Great ideal Vaccination provides benefits even to those people who don't participate in the
transaction. By providing support for them, we address a positive externality!

5) A parallel shift to the budget line

If income increses, budget line shifts to the outward , in parallel with the original one.