Consider a market with a price ceiling. If the price ceiling is lowered which of the following would happen?
a. The consumer surplus would increase, the producer surplus would decrease and the dead weight loss would decrease
b. The consumer surplus would increase, the producer surplus would decrease and the dead weight loss would increase
c. The consumer surplus, the producer surplus and the dead weight loss would all decrease
d. The consumer surplus, the producer surplus and the dead weight loss would all increase
e. The consumer surplus would decrease, the producer surplus would increase and the dead weight loss would increase
B
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A backward-bending labor supply curve implies that
A) the substitution effect dominates the income effect at higher wage rates but not at lower wage rates. B) the substitution effect dominates the income effect at lower wage rates but not at higher wage rates. C) leisure is an inferior good. D) workers are irrational.
Adding the quantities demanded by all consumers at every price will yield
A) the market-clearing price. B) the number of consumers. C) the total substitution effect from a price change. D) the market demand curve.
The reason that opportunity costs arise is that
A. people have unlimited wants. B. there are no alternative decisions that could be made. C. an economy relies on money to facilitate exchange of goods and services. D. resources are scarce.
If an increase in income leads to an increase in the demand for sushi, then sushi is
A) a normal good. B) a neutral good. C) a complement. D) a necessity.