Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:
A. price of rice will increase, but we cannot say for sure what will happen to the equilibrium quantity.
B. quantity of rice will increase, but we cannot say for sure what will happen to the equilibrium price.
C. price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity.
D. quantity of rice will decrease, but we cannot say for sure what will happen to the equilibrium price.
Answer: C
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However, there is a difference in the reasons why the labor demand curve slopes downwards. What is this difference?
Along a straight-line downward-sloping demand curve, a decrease in the market price of a good:
A) will cause no change in consumer surplus. B) will increase consumer surplus. C) will decrease consumer surplus. D) may either decrease or increase consumer surplus.
Which would be considered an investment, according to economists?
A. The sale of a retail department store building by Sears to JCPenney. B. The purchase of newly issued shares of stock in Dell. C. The construction of a new plant by Ford. D. Public transfer payments.
According to the Taylor rule, if real GDP is 4 percent below potential GDP, the Fed should:
A. lower the federal funds rate by 2 percentage points. B. lower the federal funds rate by 4 percentage points. C. lower the federal funds rate by 8 percentage points. D. do nothing, as the economy will correct itself.