Refer to Figure 6.4. Suppose that the current price is set at B and Q2 units of a good are traded. Which of the following statements is incorrect?
A. The current market transaction is efficient.
B. Total surplus would decrease should the price fall.
C. Total surplus would increase should the price rise.
D. The quantity demanded equals the quantity supplied.
Answer: C
You might also like to view...
If the production technology in a Robinson Crusoe economy has increasing returns to scale, there is not competitive equilibrium.
Answer the following statement true (T) or false (F)
Empirical studies have shown that in most situations people are:
A) risk-averse. B) risk-neutral. C) risk-loving. D) either risk-neutral or risk-loving but not risk-averse.
If checkable deposits in Bank A total $620 million and the required reserve ratio is 9 percent, then required reserves at Bank A equal
A) $564.2 million. B) $468 million. C) $28.8 million. D) $55.8 million. E) $558 million.
What is moral hazard?
A) It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus. B) It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off. C) It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. D) It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.