When the demand for coffee increases, ceteris paribus, the equilibrium price will also increase because
A. The market supply and demand curves do not intersect.
B. A shortage exists at the old equilibrium price.
C. Market demand must be upward-sloping.
D. There must be a surplus of the good.
Answer: B
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
If the price of potatoes is reduced, consumers likely buy
A. significantly more potatoes. B. significantly fewer potatoes. C. roughly the same quantity of potatoes. D. an unknown quantity of potatoes; in this situation, consumers’ actions cannot be predicted.
A Swiss watch company advertises its history of superior craftsmanship. The company thinks that this will
a. Make the demand for the product more elastic b. Make the customers more sensitive to the price c. Not impact the demand for their product d. None of the above
Suppose studies showed that 12 percent of all teens choose to participate in underage drinking. If policymakers wish to reduce the amount of underage drinking, they should:
A. not share that statistic, and let teens think that it's a huge problem with all teens. B. Informing them will have no impact on their individual behavior. C. let teens know that the great majority of teens currently do not drink. D. The statistic is likely to influence their personal decision, but it is impossible to predict in what way without more information.