The price of a good is above the equilibrium price,
a. there is a surplus and the price will rise.
b. there is a surplus and the price will fall.
c. there is a shortage and the price will rise
d. there is a shortage and the price will fall.
e. the quantity demanded is equal to the quantity supplied and the price remains unchanged.
b. there is a surplus and the price will fall.
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The substitution effect of a decrease in the wage rate would lead most people to supply
A. less labor and demand less leisure. B. less labor and demand more leisure. C. more labor and demand less leisure. D. more labor and demand more leisure.
Why does a network externality arise?
a. Each additional unit of a good sold reduces the value of the previously sold units. b. As more and more units of a good are produced, the average cost declines. c. Consumption of a good by one user does not affect the consumption of subsequent users. d. The firms enjoy economies of scale in the long run. e. Each additional unit of a good sold increases the value of the previously sold units.
Conservatives and liberals ___ on the causes of poverty and ___ on how to solve the poverty problem.
A. agree; agree B. agree; disagree C. disagree; agree D. disagree; disagree
Which of the following represents the basic principle of public choice theory?
A. Politicians act consistently in the public's interest. B. Politicians follow their own self-interest and seek to maximize their reelection chances, rather than promote the best interests of society. C. Politicians act in the public interest once they are elected, but follow their own self-interest and seek to maximize their reelection chances during a political campaign. D. Politicians have an incentive to be cost-conscious and creative because they face the same type of profit motive as producers.