The figure below shows the market for MP3 players in a small country. Dd and Sd are the domestic demand and domestic supply curves of the MP3 players. QQ is the quota quantity. The quota on MP3 players will cause domestic consumers to
A. lose $195 million.
B. gain $25 million.
C. lose $25 million.
D. lose $170 million.
Answer: A
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The income effect of a price change refers to
A) the change in demand that occurs when both income and price change. B) the change in demand that occurs when consumer income changes. C) the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. D) the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.
If quantity demanded is greater than quantity supplied, the market price must be
a. above equilibrium. b. at equilibrium. c. below equilibrium. d. above cost of production.
New classical economists say that an unanticipated increase in aggregate demand first:
A. increases the price level and real output, and then reduces short-run aggregate supply such that the economy returns to the full-employment level of output. B. increases the price level and real output, and then increases long-run aggregate supply. C. increases long-run aggregate supply, and then increases the price level and real output. D. reduces short-run aggregate supply, and then reduces long-run aggregate supply.
In general, free-trade makes the people of a country better off.
Answer the following statement true (T) or false (F)