Which of the following describes the difference between "scarcity" and "shortage"?
A) There is no difference; either word can be used to describe the situation that exists when there is less of a good or service available than people want.
B) In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.
C) There is a shortage of almost everything. Scarcity occurs only if the quantity demanded of a good or service is greater than the quantity supplied at the current market price.
D) In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the equilibrium price.
Answer: B
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The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner increased?
A) It would rotate inward around the vertical intercept, 10 lobster dinners. B) It would rotate outward around the vertical intercept, 10 lobster dinners. C) It would rotate inward around the horizontal intercept, 20 steak dinners. D) It would rotate outward around the horizontal intercept, 20 steak dinners.
Which of the following would likely result as a consequence of rent controls?
A) a reduction in the rate of construction of rental housing units B) unimproved buildings and apartment complexes C) limits on tenant mobility D) All of the above are correct.
The circular flow model represents the establishment of market value for:
a. goods and services. b. wages and salaries. c. profits and rents. d. all of these.
When the Fed sells bonds in the open market, interest rates _______ and aggregate demand shifts to the _______.
A. Rise; left B. Rise; right C. Fall; left D. Fall; right