Which of the following is an example of a normative statement?
A. Higher prices cause consumers to buy less.
B. There should be no unemployment in an advanced industrial society.
C. Equilibrium price implies that quantity demanded equals quantity supplied.
D. The unemployment rate is six percent.
Answer: B
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We observe that the equilibrium price of digital cameras has fallen and the equilibrium quantity of digital cameras has increased. Which of the following events could be responsible for this?
A) Technological advances in digital camera production. B) Consumers' preferences changed in favor of digital cameras. C) The price of film cameras rose. D) Workers who make digital cameras received a pay raise.
A phenomenon closely related to market overreaction is
A) the random walk. B) the small-firm effect. C) the January effect. D) excessive volatility.
When asset prices increase above their fundamental values it is called an
A) asset-price bubble. B) irrational bubble. C) asset-price spike. D) irrational spike.
Tina Makumbi imports sesame oil from Ethiopia and sells to a market that has a downward sloping demand curve.The demand curve indicates that some consumers are willing to pay $1.50 or more per pound for the first few pounds, but every consumer gets to buy at the market clearing price of $0.50 per pound. The difference between the most that consumers would pay and the actual amount they do pay is
called a. exporter surplus b. trade balance c. producer surplus d. consumer equilibrium e. consumer surplus