Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most likely explanation for these changes is:
A. an increase in the supply of french fries.
B. an increase in demand for french fries.
C. a decrease in demand for french fries.
D. a decrease in the supply of french fries.
Answer: D
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In which of the following situations would a negative externality most likely be involved?
A. It is night and Kenneth is sitting in his easy chair reading a novel by John Grisham. The lamp he is reading by has only a 40-watt light bulb. He is having a hard time reading. B. Alyson lives near an airport. At five o'clock in the morning every day she can hear the airplanes taking off and it awakens her. C. Lucy went to a fancy restaurant last night and ordered the most expensive meal on the menu. She hated it. D. Richard is taking an economics class from Professor Franklin. Professor Franklin often says things that confuse Richard.
What might explain a professional baseball player having lower production the year after signing a multi-million dollar contract?
A) the substitution effect B) the endowment effect C) bounded rationality D) the income effect
Borrowers who took out mortgages in the 1960s:
A. were harmed by the unexpected low inflation rates of the 1970s. B. benefited from the unexpectedly high inflation rates of the 1970s. C. were harmed by the unexpectedly high inflation rates of the 1970s. D. benefited from the unexpected low inflation rates of the 1970s.
The more elastic demand is for a taxed good, the smaller the excess burden associated with the tax.
Answer the following statement true (T) or false (F)