Economists view shifts of supply and demand as
a. unusual events that call for government intervention
b. unusual events resulting from the failure of the price to fall
c. normal and frequent events
d. normal and frequents events that do not affect equilibrium prices
e. normal and frequent events that result from government intervention
C
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If one person's consumption of a good means that no one else can consume it,
a. that good is called a pure public good b. production of that good creates a negative externality c. consumption of that good creates a positive externality d. the good is said to be excludable e. the good is said to be rival
The equilibrium quantity is the common quantity where the amount of the product consumers want to buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied).
Select whether the statement is true or false. A. True B. False
If the ice cream industry is a competitive price-taker market and all ice cream producers are earning zero economic profit, what will be the impact of an increase in the demand for ice cream?
a. Firms will exit the ice cream industry in the long run since they are earning zero economic profit. b. The firms will now be able to earn long-run economic profit assuming that barriers to entry remain low and new firms can enter the market. c. A shortage of ice cream will develop. d. The price of ice cream will rise initially, inducing the existing firms to expand output and new firms to enter the industry.
It does not matter whether a tax is levied on the buyers or the sellers of a good because
a. sellers always bear the full burden of the tax. b. buyers always bear the full burden of the tax. c. buyers and sellers will share the burden of the tax. d. None of the above is correct; the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax.