Suppose the market for tortillas is initially in equilibrium, but then the equilibrium wage rate and the equilibrium quantity of labor both increased. What happened in the market for tortillas?
A. The supply for tortillas decreased.
B. The demand for tortillas increased.
C. The supply for tortillas increased.
D. The demand for tortillas decreased.
Answer: B
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The sign of the price elasticity coefficient for a normal good will:
a. always be negative. b. always be positive. c. be positive if demand is elastic but negative if demand is inelastic. d. be positive if demand is inelastic but negative if demand is elastic.
A result of a positive externality in the production of a good is that
A. the price system will over-allocate resources to the production of that good or service. B. the market demand will be too high. C. the price system will under-allocate resources to the production of that good or service. D. the market supply will be too high.
Ned buys wine and bread. When the price of wine rises, the substitution effect induces Ned to buy ________ wine and ________ bread.
a. less, more b. more, less c. less, less d. more, more
Suppose technical change makes it cheaper for cable television suppliers to supply their service. The capture theory would predict that the regulators would
A. force the firms to pass the savings on to consumers in the form of better service. B. force the firms to pass the savings on to consumers in the form of lower prices. C. force the firms to pass some of the savings on to consumers and permit them to keep some of the savings for themselves. D. allow the firms to capture the savings and would lower price only if the firms asked them to.