Assume that the price for lawn care has fallen and sales of lawn care services have also fallen. One can conclude that
A) the law of supply has been violated.
B) the number of lawn care service companies has increased.
C) the demand for lawn care service has decreased.
D) lawn care services are deliberately charging low prices because they want to discourage people from maintaining their own lawns.
Answer: C
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New classical economists believe that if policy is correctly anticipated and if rational expectations hold, when the Fed increases the money supply the result will be a(n) ______________ in the price level and ____________________________
A) decrease; no change in Real GDP B) decrease; decrease in Real GDP C) increase; no change in Real GDP D) increase; increase in Real GDP
When a firm imposes an external social cost, the government should impose a tax exactly equal to the marginal social cost to ensure that the efficient level of output will be produced.
Answer the following statement true (T) or false (F)
Refer to the given market-for-money diagrams. The total demand for money is shown by:
A. D 1 .
B. D 2 .
C. D 3 .
D. S.
The owner of a pizza shop observes that when she raises the price of a large pizza, her total revenue decreases, and when she lowers the price of a large pizza, her total revenue increases. This suggests that:
A. pizza lovers act irrationally. B. the demand for her large pizzas is inelastic with respect to price. C. the demand for her large pizzas is elastic with respect to price. D. there are few good substitutes for a large pizza.