Which of the following will tend to occur when a surplus exists in a market?
A) supply will increase and demand will decrease until the surplus disappears.
B) supply will decrease and demand will increase until the surplus disappears.
C) the price will tend to rise over time.
D) the price will tend to decrease over time.
Answer: D
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If the price of the Brazilian real is 60 cents and a U.S. resident purchases a Brazilian-manufactured item for 60,000 real, there will be
A) a quantity demanded of 60,000 real and a quantity supplied of $60,000. B) a quantity demanded of 60,000 real and a quantity supplied of $36,000. C) a quantity demanded of 60,000 real, but we cannot determine the effect in the market for dollars. D) a quantity supplied of 60,000 real and a quantity demanded of 60,000 yen.
Which of the following statements is true about individuals and utility?
A. Individuals seek to maximize utility. B. Individuals seek to maximize their income, not utility. C. Individuals will either minimize or maximize utility depending on the situation. D. Individuals rarely try to maximize their utility.
According to the graph shown, the monopolistically competitive firm:
These are the cost and revenue curves associated with a monopolistically competitive firm.
A. will earn positive profits equal to area A.
B. will earn positive profits equal to area C.
C. will earn negative profits (a loss) equal to area A.
D. will earn negative profits (a loss) equal to area B.
When Pigouvian subsidy is imposed on a market with a positive externality, total surplus:
A. increases more than the increase in consumer surplus. B. decreases less than the increase in consumer surplus. C. decreases more than the decrease to producer surplus. D. increases less than the decrease to producer surplus.