Use the following graph to answer the next question. 
If the industry were served by a pure monopoly, the profit-maximizing price and quantity of output would be ________.
A. P1, Q1
B. P1, Q3
C. P3, Q1
D. P2, Q2
Answer: C
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The basic economic problem is
a. how to become wealthy b. how to save the planet from pollution c. how to equally distribute income d. meeting people's wants and needs in a world of scacity
An increase in demand and a decrease in supply cause which of the following?
a. Equilibrium price change is indeterminate. b. Equilibrium quantity decreases. c. Equilibrium price falls. d. Equilibrium price rises. e. Equilibrium quantity increases.
The Gibson Paradox shows that:
a. Central banks face a paradox when they want to stimulate their economies because consumers may not spend the newly created money. b. When monetary policy is loose and expected inflation rises, the nominal interest rate rises rather than falls. c. When fiscal policy is loose (i.e., high government spending and falling tax rates), society as a whole is more willing (not less willing) to give up consumption today for consumption in the future. d. When expected inflation rises, nominal interest rates fall rather than rise. e. When expected inflation falls, government spending tends to increase, rather than decrease, as is frequently assumed.
The reserves of financial institutions:
a. Are the largest liability in a financial institution's balance sheet. b. Are assets that financial institutions try to maximize. c. Are assets that financial institution's try to keep at the legal limit. d. Are made up mainly of government securities and high quality corporate bonds. e. Include the liability called "Borrowing from the central bank."