When does a shortage occur?
a. When price is less than equilibrium price.
b. When goods are scarce.
c. When quantity demanded is less than quantity supplied.
d. When quantity demanded exceeds quantity supplied at the equilibrium price.
e. When some of the people who need the product are not willing and able to buy it at the equilibrium price.
a. When price is less than equilibrium price.
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The income elasticity of demand for food is roughly 1. A consumer's monthly income is $2,000, of which 20% is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be
A. $800 per month. B. $1,000 per month. C. $500 per month. D. $400 per month.
If Toby buys two goods and the prices of both goods increase by 50%
A) the budget constraint will be unchanged. B) the slope of the budget constraint stay the same. C) the slope of the budget constraint will decrease. D) the budget constraint will shift outward in a parallel fashion.
The entry of firms into a perfectly competitive industry causes the supply curve to
A. increase its slope. B. decrease its slope. C. move toward the right. D. move toward the left.
Before the breakup of AT&T several years ago, profits on long-distance calls offset losses on basic residential service. This practice is known as
a. abuse of monopolistic power. b. cream skimming. c. cross-subsidization. d. the Ramsey rule.