An article in the Wall Street Journal in early 2001 noted two developments in the market for laser eye surgery. The first development concerned side effects from the surgery, including blurred vision. The second development was that the companies renting
eye-surgery machinery to doctors had reduced their charges. In the market for laser eye surgeries, these two developments
A) decreased demand and decreased supply, resulting in a decrease in the equilibrium quantity and an increase in the equilibrium price of laser eye surgeries.
B) decreased demand and increased supply resulting in an increase in both the equilibrium quantity and the equilibrium price of laser eye surgeries.
C) decreased demand and increased supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of laser eye surgeries.
D) decreased demand and increased supply, resulting in a decrease in both the equilibrium price and the equilibrium quantity of laser eye surgeries.
Answer: C
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A) the individual's real wealth and consumption expenditure decrease. B) the individual's real wealth decreases but real national wealth increases. C) there is no change in the individual's real wealth. D) the individual's real wealth increases.
If the government increases military spending ________
A) the IS curve would shift to the left B) output will decrease if interest rates remain fixed C) the unemployment rate could fall D) all of the above E) none of the above
The marginal revenue product of a resource is best described as the
a. selling price of the last unit of output produced. b. increment of total cost resulting from the use of an additional unit of the resource. c. marginal product of the resource divided by the unit price of the good produced. d. change in total revenue resulting from employing an additional unit of the resource.
Eliza wants to borrow $100 from Sandy. Sandy wants to make 4% real return on his money, so they both agree on a 4% interest rate paid next year. Eliza and Sandy did not anticipate any inflation, yet the actual inflation turned out to be -5% next year. In this case
A. Eliza will pay an 9% real interest rate. B. Eliza will pay a 4% nominal interest rate. C. Sandy is better off. D. all of the above.