When gasoline prices rose in the early 2000s, the demand for SUVs fell. An economist would predict that SUV prices would decline or at least not rise as quickly.
Answer the following statement true (T) or false (F)
True
A shift in demand leads to a reduction in prices.
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Consider the above table. If the government imposes a price ceiling on garbanzo beans of $8, what would be the likely result?
A) a surplus of 2,000 garbanzo beans on the market B) a shortage of 2,000 garbanzo beans on the market C) Market equilibrium will be reached. D) The quantity demanded of garbanzo beans would fall to zero.
In what way does prospect theory differ from the standard theory of expected utility?
a. With prospect theory, preferences depend only on final wealth levels. b. With prospect theory, preferences vary with initial (reference) wealth levels. c. With prospect theory, individuals are risk loving over small losses. d. With prospect theory, risk aversion does not play a role.
Which of the following techniques adopted by the central banks around the world have helped them to achieve credibility?
a. Maintaining a low rate of inflation through tight monetary policies b. Publicly announcing a target rate of inflation c. Refusing to bail out the commercial banks at times of failure d. Supporting all government budget deficits through deficit financing e. Reducing unemployment amidst high inflation
The increase in the price of sugar created by the tariff will lead domestic consumption to fall by ________ tons per year, compared to when the economy is open without the tariff.
A. 30 B. 20 C. 40 D. 10