If the market price of green tea is $20.00 per pound and the government will not allow green tea growers to charge more than $25.00 per pound of green tea, which of the following will happen?
A. Demand must eventually decrease so that the market will come into equilibrium at a price of $17.50.
B. Supply must eventually increase so that the market will come into equilibrium at a price of $17.50.
C. There will be a shortage of green tea.
D. The price ceiling will be ineffective and the market will remain in equilibrium.
Answer: D
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Bookkeeping
Which of the following properly matches the owner of a resource with the corresponding payment?
a. Land owners and rent b. Entrepreneurs and interest payments c. Laborers and profit d. Entrepreneurs and rent e. Capitalists and salaries
In the long run, foreign labor remains cheap when and if
a. it becomes highly efficient and competes successfully internationally. b. countries erect barriers to trade between poor countries. c. productivity increases more rapidly in poor countries than in rich countries. d. it remains inefficient compared to other countries' labor.
Which of the following examples is most typical of monopolistic competition?
a. ARD, Inc. competes with six other firms in the paper towel market. b. Tropics, Inc. is the only producer of guava in the international market. c. Glow, Ltd. and SolarMax, Inc, are the two major producers of solar panels. d. TropicFreeze, Inc. remains the sole producer of papaya ice cream.