Figure 5-3
Assume the market consists of three consumers with the demand curves in Figure 5-3. At a price of 1, the total market demand is
A. 40.
B. 80.
C. 140.
D. 150.
Answer: C
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The supply curve shows the
A) marginal benefit of a firm producing another unit of a good. B) dollars' worth of other goods and services we are willing to give up to get another unit of the good. C) minimum price that firms must receive to supply a certain quantity of a good. D) producer surplus of producing the good. E) maximum price that firms will accept in order to supply a certain quantity of a good.
Which of the following is TRUE regarding the effect expected future income has on saving?
I. As expected future income increases, saving increases. II. Young people typically save very little. III. Middle aged people, earning higher incomes, are not very big savers. A) I and III B) II only C) III only D) II and III
A product is likely to have a price elasticity of demand that exceeds 1 when
A) its price falls. B) the percentage of income spent on it decreases. C) it is a necessity. D) it has close substitutes.
Advocates of flexible exchange rates claim that under flexible exchange rates, the central bank of
A) an overheated economy could cool down activity by increasing the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. B) a cooled economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. C) an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. D) an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve outflow would undermine its stabilization effort. E) an overheated economy could cool down activity by decreasing employment and increasing output without worrying that this would undermine its stabilization effort.