Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because
a. buyers tend to be much less sensitive to a change in price when given more time to react.
b. buyers tend to be much more sensitive to a change in price when given more time to react.
c. buyers will have substantially more real income over a ten-year period.
d. the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.
b
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Suppose Dan is willing to pay a maximum of $3,000 for a piano, but finds one he can buy for $2,500. Dan's consumer surplus from this piano is
A) $5,500. B) $3,000. C) $2,500. D) $500. E) zero because he buys the piano.
Which of the following is not likely to cause a change in the supply of wheat?
a. a government subsidy to farmers who do not grow wheat b. an increase in the price of soybeans c. a decrease in the price of fertilizer d. a fall in the price of wheat e. producers expect product prices to rise
Which of the following is likeliest to have increased at point B?
a. real wealth
b. household debt
c. consumer spending
d. consumer confidence
If the economy is in a recessionary gap and the government attempts to balance the budget, the effect will be to
A. counteract the recession. B. worsen and prolong the recession. C. end the recession sooner. D. increase the level of real GDP.