Sarah and David both have linear demand curves for lemonade. Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass. Sarah's demand curve is more inelastic than David's
A change in the price of lemonade from 50 cents to 25 cents per glass will A) decrease Sarah's consumer surplus more than David's.
B) decrease David's consumer surplus more than Sarah's.
C) increase Sarah's consumer surplus more than David's.
D) increase David's consumer surplus more than Sarah's.
D
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Which of the following describes a natural monopoly?
a. When economies of scale are large relative to size of market b. Created by the government through patents, copyrights c. When one firm has control of a physical resource d. When one firm pursues predatory pricing
Worries about foreign trade in goods and services include fear of job ______, environmental dangers, and unfair labor practices.
a. creation b. loss c. stagnation d. upskilling
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $800 per month in tax revenue. We can conclude that the equilibrium
quantity of widgets has fallen by a. 40 per month. b. 50 per month. c. 75 per month. d. 100 per month.
The real wealth effect provides a partial explanation for why the aggregate demand curve slopes downward. Which of the following statements best explains the real wealth effect?
A. At a lower price level domestically produced items are relatively less expensive than foreign goods and therefore are in greater demand. B. At a lower price level the real interest rate tends to be lower, and thus the quantity of investment goods demanded is larger. C. At a lower price level consumers will buy less because of a reduction in the real money supply. D. At a lower price level the purchasing power of accumulated savings is larger, and thus consumers will purchase more goods.