Other things equal, a price ceiling will increase consumer surplus by allowing customers to buy more at the lower price
a. True
b. False
Indicate whether the statement is true or false
False
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The most significant difference between perfect competition and monopolistic competition is that
A) in a perfectly competitive market products are differentiated, while in a monopolistically competitive market products are homogeneous. B) in a perfectly competitive market products are homogeneous, while in a monopolistically competitive market products are differentiated. C) in a perfectly competitive market there is a large number of sellers, while in a monopolistically competitive market there is a small number of sellers. D) in a perfectly competitive market there is a small number of sellers, while in a monopolistically competitive market there is a large number of sellers.
In a properly functioning free market
a. the price of any good reflects its marginal utility to consumers. b. price will equal marginal cost. c. the invisible hand will assure that society's resources are used efficiently. d. All of the above are correct.
Suppose the government of South Island has fixed the value of its currency, the Islandia, at $0.50 per Islandia, but the market equilibrium value of the Islandia is $0.75 per Islandia. In order to maintain the official value of the Islandia the Central Bank of South Island must either ________ domestic interest rates or supply Islandia, which causes the supply of international reserves to ________.
A. raise; decrease B. lower; increase C. lower; decrease D. raise; increase
The demand curve facing a dominant firm in the price leadership model is derived by subtracting the
A. amount supplied by the smaller firms from market demand. B. dominant firm's marginal cost curve from the industry's supply curve. C. amount demanded by customers from the smaller firms from market supply. D. amount supplied by the smaller firms from market supply.