The market for milk is in equilibrium. Recent health reports indicate that calcium is absorbed better in natural forms such as milk, and at the same time, the cost of milking equipment rises. Carefully analyze the probable effects on the market
What will be an ideal response?
The heath reports are likely to cause an increase in the demand for milk. Alone, this would increase both the equilibrium price and quantity of milk. The increase in equipment costs will cause a decrease in the supply of milk, and this alone would cause an increase in equilibrium price and a decrease in equilibrium quantity. Taken together, both effects will lead to an increase in price, and thus we can be certain that the equilibrium price will rise. The effect on quantity is unclear as the supply and demand shifts move quantity in different directions.
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If the interest rate rises, the
a. quantity of loanable funds demanded by firms decreases b. quantity of loanable funds demanded by government decreases c. quantity of loanable funds demanded by firms increases d. quantity of loanable funds demanded by government increases e. demand for loanable funds curve shifts to the right
Which of the following reflects an increase in unemployment?
A) an increase in the labour force participation rate B) an increase in the involuntary part-time rate C) a decrease in the unemployment rate D) an increase in the employment-to-population ratio E) none of the above
Suppose George's income is $10,000 and he pays a tax of $1,000, but Laura's income is $50,000 and she pays a tax of $4,000. Such a tax is:
A. regressive. B. progressive. C. proportional. D. flat.
Which of the following options could be used to eliminate a recessionary gap?
A. Increase government spending. B. Decrease government spending. C. Decrease investment. D. Increase taxes.