Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary
Answer: D
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If a price ceiling is set above the equilibrium price in a market
A. rationing will be necessary. B. the quantity supplied will equal the quantity demanded. C. the quantity demanded will exceed the quantity supplied. D. surpluses of the commodity will develop.
If MiiTunes and The Rock Shop are both in the music business and faced with the choices outlined in the figure, we can predict the outcome will be that:
This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.
A. MiiTunes charges high prices and The Rock Shop does not enter.
B. there is more than one stable outcome to this game.
C. there is no stable outcome to this game.
D. None of these statements is true.
In a planned economy the concept of efficiency is
a. more important than in a market economy. b. less important than in a market economy. c. not important at all. d. as important as in a market economy.
Which of the following is a positive economic statement?
a. Raising the federal minimum wage to $6.50 per hour will cause the rate of unemployment to increase. b. The United States spends too much on welfare. c. Philosophy is not as interesting as economics. d. Cold weather is much more enjoyable than warm weather.