A local flower grower grows products in a plot of land, which is exceptionally colorful and is admired by many passersby. There is no way to charge for this in the price of the flowers. We can safely conclude that
A. the florist produces too many flowers.
B. the florist produces too few flowers.
C. the florist produces the right amount of flowers.
D. society pays the socially optimal amount for the flowers.
Answer: B
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Which of the following statements best describes the study of economics?
A. Economics studies how the Federal Reserve handles fluctuation in business cycles. B. Economics studies how individuals and groups manage scarce resources. C. Economics studies how people maximize returns in the stock market. D. Economics studies how governments determine appropriate tax rates.
Arrange the following goods from least to most elastic, explaining your ordering: gasoline, Shell gasoline, and Shell gasoline at a particular gas station
Aggregate supply can be thought of as
A. a fixed amount of output. B. unrelated to the price level. C. a schedule of output at different price levels. D. the volume of goods at the ends of the production possibilities curve.
Suppose the Federal Reserve System has a required reserve ratio of 0.10 and there are no excess reserves in the system. If the Open Market Committee buys $50 million of securities from the commercial banking system, the total lending capacity for the system
A. Increases by $500 million. B. Decreases by $500 million. C. Decreases by $50 million. D. Increases by $50 million.