Suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit:
A. there will be an excess demand for the product.
B. there will be an excess supply of the product.
C. the quantity supplied of the product will be less than the quantity demanded of that product.
D. there will be a shortage of that product.
Answer: B
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If the cross-price elasticity of demand between two goods is 0,
a. a price change for one good will be exactly offset by a price change for the other b. neither demand curve would shift following a change in the price of one of the goods c. there is no income effect between the two goods d. the demand for each good is price inelastic e. the demand for each good is price elastic
Federal deficits amounted to 3.5 percent of the U.S. GDP by 2003 because of: a. the global financial crisis of 2002 that increased the rate of unemployment
b. an increase in the cost of fighting the war against terrorism. c. an improving stock market that decreased interest payment burdens for the government. d. a decrease in military and defense spending due to the end of the war in Iraq. e. an increase in welfare spending and Medicare expenses.
Assume a certain competitive price-taker firm is producing Q = 1,000 units of output. At Q = 1,000 . the firm's marginal cost equals $15 and its average total cost equals $11 . The firm sells its output for $12 per unit. At Q = 999, the firm's total cost amounts to
a. $10,985. b. $10,990. c. $10,995. d. $10,999.
Which of the following is not correct?
a) During economic contractions most firms experience dwindling profits. b) Recessions come at irregular intervals and are almost impossible to predict. c) When real GDP expands, the rate of unemployment rises. d) Short-run fluctuations in economic activity can happen in developed countries such as the U.S.