As the price level in an economy increases, firms receive lower revenues for their output and thus increase production in the short run
a. True
b. False
Indicate whether the statement is true or false
False
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The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost of producing the 200th dozen doughnuts each day?
A) $10.00 per dozen B) $8.00 per dozen C) $6.00 per dozen D) $4.00 per dozen
Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples are misleading because
A) some individuals in both countries may be made worse off because of trade. B) trade restrictions are likely to be imposed as trade grows over time. C) they do not account for the reduction in wages that occurs in both countries as a result of trade. D) in the real world, rich countries can take advantage of poor countries.
The above figure shows the supply and demand curves for rice in the U.S. and in Japan. Assume there is no trade between the two countries. If bad weather causes the supply curves in each country to shift leftward by the same amount, then
A) the price will increase the same amount in both countries. B) the price will decrease the same amount in both countries. C) the price will increase more in Japan than in the U.S. D) the price will decrease more in Japan than in the U.S.
Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price. Which of the following will happen?
a. quantity demanded will decrease b. a surplus will develop c. a shortage will develop d. the quantity sold will rise e. the market will remain in equilibrium