There is a 50 percent decrease in the price of lumber used by a firm that builds new homes. This causes
A) a decrease in the quantity of new homes supplied.
B) an increase in the supply of new homes.
C) an increase of the quantity supplied of new homes.
D) a decrease in the supply of new homes.
Answer: B
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If Rob deposits $300 in currency into his savings account at Bank of America,
A) M1 decreases. B) M1 does not change. C) M2 increases. D) M2 decreases. E) M1 and M2 both increase.
In the Cournot model, the output that a firm chooses to produce increases as
A) the total output of other firms increases. B) the number of firms in the market increases. C) the number of firms in the market decreases. D) its marginal cost increases.
According to the invisible hand principle, competitive markets generally
a. bring the self-interest of individuals into harmony with the efficient allocation of resources, even though centralized planning of economic activities is absent. b. bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning. c. require central direction; otherwise, the actions of self-interested individuals will conflict with the general interests of society. d. promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers.
Which two groups of decision makers are included in the simple circular-flow diagram?
a. markets and government b. households and government c. firms and government d. households and firms