What are the major problems that will tend to arise if there are legal limits on the movement of prices?
A. Favoritism and corruption of officials and market participants
B. Unenforceability of laws and higher costs of transactions
C. Increasing restrictions to enforce the laws
D. Misallocation of resources as prices no longer correspond to costs
E. All of these responses are correct.
Answer: E
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The marginal propensity to consume (mpc) can be defined as the fraction of
A) a change in income that is spent. B) a change in income that is saved. C) income that is spent. D) income that is saved.
A local store noticed that when it increased the price of milk from $2.50 to $3.50 per gallon, it sold the same amount of milk per week (165 gallons). Since everything else remained the same, we would say the
a. demand for milk is perfectly elastic b. demand for milk is elastic c. demand for milk is perfectly inelastic d. demand for milk is unitary elastic e. law of supply does not apply in this situation
An adverse supply shock would shift _____
What will be an ideal response?
Why does price equal marginal cost (P = MC) in a perfectly competitive market in equilibrium?
A. In perfect competition, buyers set marginal revenue equals marginal cost (MR = MC) and sellers set marginal revenue equal to price (MR = P). B. In perfect competition marginal revenue equals price (MR = P), and profit-maximizing businesses set marginal revenue equal to marginal cost (MR = MC). C. In perfect competition, sellers set marginal revenue equals marginal cost (MR = MC) and buyers set marginal revenue equal to price (MR = P). D. In perfect competition marginal revenue equals marginal cost (MR = MC), and profit-maximizing businesses set marginal revenue equal to price (MR = P).