Rent controls are examples of which of the following?
a. price ceilings
b. price floors
c. equilibrium prices
d. subsidies
a. price ceilings
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Explain why an airline may decide to sell an air ticket to a stand-by passenger at less than the full fare if there are empty seats on the airplane?
What will be an ideal response?
The spread between the interest rates on Baa corporate bonds and U.S. government bonds is very large during the Great Depression years 1930-1933. Explain this difference using the bond supply and demand analysis
What will be an ideal response?
While a television news reporter might state that "Today the Fed raised the federal funds rate from 1 percent to 1.25 percent," a more precise account of the Fed's action would be as follows:
a. "Today the Fed told its bond traders to conduct open-market operations in such a way that the equilibrium federal funds rate would increase to 1.25 percent.". b. "Today the Fed raised the discount rate by a quarter of a percentage point, and this action will force the federal funds rate to rise by the same amount.". c. "Today the Fed took steps to increase the money supply by an amount that is sufficient to increase the federal funds rate to 1.25 percent.". d. "Today the Fed took a step toward expanding aggregate demand, and this was done by raising the federal funds rate to 1.25 percent.".
The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist.
At this monopolist's profit-maximizing level of output, it:
A. earns an economic profit of $16 per day. B. earns an economic profit of $64 per day. C. incurs an economic loss of $16 per day. D. incurs an economic loss of $64 per day.