If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?
a. immediately after the price increases
b. one month after the price increase
c. three months after the price increase
d. one year after the price increase
d
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Suppose that the federal government imposes a price floor (support price) in the milk market at a price of $3 per gallon. If market quantity demanded at $3 is 1 billion gallons, and if market quantity supplied is 1.5 billion gallons, then which of the following is true?
a. There is a surplus of 1 billion gallons of milk, and the federal government will buy 1.5 billion gallons to maintain the $3 price. b. There is a shortage of 500 million gallons of milk, and the federal government will buy an additional 500 million gallons to maintain the $3 price. c. There is a shortage of 500 million gallons of milk, and the federal government will buy 1 billion gallons to maintain the $3 price. d. There is a surplus of 500 million gallons of milk, and the federal government will buy this 500 million gallons to maintain the $3 price.
A country temporarily producing a combination of 12 units of guns and 5 units of butter would be ________________ (outside/on/inside) the production possibilities curve.
Figure 2-7
Which of the following could explain the shift in the production possibilities frontier from AB to AC in ?
a.
a productive improvement in petroleum production that has no effect on clothing production
b.
a productive improvement in clothing production that has no effect on petroleum production
c.
an increase in the size of the labor force that can produce either petroleum products or clothing
d.
oil drilling in Alaska is ended in order to protect the environment
e.
major oil reserves are discovered off the coast of Africa
Which of the following is not implied to occur when economic efficiency is attained?
A. The gap between marginal benefits and marginal costs of product is at a maximum. B. The per-unit cost of output produced is at a minimum. C. Total consumer and producer surplus is at a maximum. D. Allocative efficiency is achieved.