To the extent that a governmental price control succeeds in affecting price, it can be expected to lead to a corresponding:
a. reduction in the volume of sales only if the price is forced down
b. reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up.
c. decrease in the volume of sales whether the price is forced up or down.
d. increase in the volume of sales whether the price is forced up or down.
c
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Suppose a 20 percent increase in the price of gasoline results in a 25 percent increase in the quantity supplied. This response means that gasoline has
A) an elastic supply. B) an inelastic supply. C) a unit elastic supply. D) an inelastic demand. E) an elastic demand.
Beverly spends $100 on a teeth whitening kit. After one application, her gums are inflamed and it feels like her mouth is on fire. Beverly is trying to decide whether to apply the treatment again, or throw the kit away. The opportunity cost of a second application is:
A. $100. B. the pain and suffering involved with the second application. C. $100 + the pain and suffering involved with the second application. D. $100 + the pain and suffering involved with the first and second application.
Utility analysis helps economists understand
A) how people make decisions about what they buy and how much. B) how to eliminate opportunity costs. C) how to eliminate scarcity. D) none of the above.
Conclusions about the misallocation of resources under conditions of monopoly depend, in part, on the crucial assumption that
A) monopolies are interested in economic profits and competitive firms are not. B) the monopolization of a perfectly competitive industry does not change the cost structure of the industry. C) the economies of scale exist only in perfectly competitive industries. D) the marginal cost curve of a monopolist is different from that of a perfectly competitive firm.