Refer to Figure 4-13 which shows the market for watermelons. Suppose the government imposes a price floor of Pw. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?
What will be an ideal response?
The price floor will have no effect on the market outcome. An effective price floor must lie above the free-market equilibrium. Thus, in this case the market outcome will be determined by forces of demand and supply.
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Use the following production possibilities frontier to answer the next question.
The selection of which point on the production possibilities frontier is most likely to result in the largest increase in economic growth over time?
A. Point 1 B. Point 2 C. Point 3 D. Point 4
Which of the following will lead to a decrease in the gross domestic product of a country?
A) An increase in the expenditure on investment B) An increase in exports C) A decrease in the expenditure incurred by the government D) A decrease in imports
The short-run Phillips curve is ________, and the long-run Phillips curve is ________
A) downward sloping; downward sloping B) downward sloping; vertical C) vertical; downward sloping D) vertical; upward sloping E) upward sloping; vertical
Look at the above figure. A union wishes to maximize wage income for employed union members, so it should aim for a wage rate ________ and a number of employed members equal to ________
A) W1, Q3 B) W2, Q2 C) W3, Q1 D) W4, Q3