If the government set a price ceiling of 50 cents for a gallon of gasoline, the most likely consequence would be
A. a surplus of gasoline.
B. the demand for automobiles fall.
C. shipping costs rise.
D. a shortage of gasoline.
D. a shortage of gasoline.
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When people suddenly want to buy something, supply increases.
Answer the following statement true (T) or false (F)
If the price of cappuccino on campus falls from $5 to $3 and the quantity demanded increases from 15 to 20, then the price elasticity of demand is approximately
A) 0.47, which mean cappuccino is inelastic. B) 0.57, which means cappuccino is inelastic. C) 1.75, which means cappuccino is elastic. D) 2.25, which means cappuccino is elastic.
Spencer and Brander's model highlights the conventional assumption that
A) government involvement in business or in the economy tends to fail. B) government subsidies tend to waste taxpayer's money. C) government subsidies cannot create a successfully competing export. D) government tends to distort when it displaces Adam Smith's Invisible Hand. E) government subsidies can produce profits that exceed the subsidy's value.
The circular flow model primarily studies how decisions are made by what two groups?
a. consumers and suppliers b. households and firms c. government and households d. government and firms