Assume that the world price of Commodity X is $9 per unit while its domestic price is $8, and the marginal cost of production is $6 per unit. If the government imposes a price ceiling of $7 on domestic output:
a. the import of Commodity X from the world market would stop.
b. the world price of Commodity X would decline.
c. a surplus of Commodity X would accumulate in the domestic market.
d. a shortage of Commodity X would be observed in the domestic market.
D
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The marginal utility from the first burrito Bobby consumes is larger than the marginal utility from the first taco Bobby consumes. As a result
A) tacos are an inferior good for Bobby. B) Bobby will never consume tacos. C) Bobby will consume a taco only if the price of a taco is less than the price of a burrito. D) burritos and tacos are substitute goods for Bobby.
Which of the following entities can diversify risk?
A. Corporations B. Insurance companies C. Individuals D. All of these entities can diversify risk.
If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph:
A. The economy will always be at full employment B. More of one product can be produced without producing less of the other product C. The production possibilities curve would be a straight line D. The two products are of equal value to the economy
Monetarists say:
A. that, because P is stable, a change in M will change Q proportionately in the opposite direction. B. a change in the money supply will change aggregate demand and therefore the nominal GDP. C. a change in the money supply will change velocity, which in turn will change nominal GDP. D. a change in the money supply will change the interest rate, which will change investment spending and nominal GDP.