Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $15, we would expect that:
A. demand will decrease until quantity demanded equals quantity supplied.
B. supply will increase until quantity demanded equals quantity supplied.
C. price will decrease until quantity demanded equals quantity supplied.
D. there will be no change in the price since the market is in equilibrium.
Answer: C
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If a business is earning an economic profit in a competitive market, it is
a. price gouging its customers. b. exploiting it workers. c. producing goods and services that are valued more highly than the resources required to produce them. d. producing goods and services in a market that is characterized by high entry barriers.
This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase.
Suppose the marginal cost and marginal benefit curves were MC0 and MB0 several decades ago. However, because information about this product is now available online, the:
A. demand for information will increase. B. optimal amount of information will increase. C. optimal amount of information will stay the same, but it will cost less to acquire. D. optimal amount of information will decrease.
The idea of the "invisible hand" tells us that individuals will pursue:
A. mutually beneficial trades with other individuals to maximize surplus. B. as few government policies as possible so the market can act freely. C. the most equitable outcome possible. D. trades in which they will be the clear winner and the other will be a loser.
A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, accounting profit for 50 items is:
A. $74. B. $236. C. $176. D. $300.