Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?
A. The market price of the resource rises.
B. Weak property rights create fears that firms will not be allowed to extract in the future.
C. An increase in market interest rates.
D. New information suggests that the demand for the resource will be greater in the future.
Answer: B
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Cyclical unemployment is the result of
A) the search process of matching workers with jobs. B) a slowdown in the economy. C) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. D) the ups and downs in inflation.
If the substitution effect dominates the income effect, then an increase in the wage rate will increase the quantity of labor supplied by an individual
a. True b. False
If the efficient markets hypothesis is correct, then
a. the number of shares of stock offered for sale exceeds the number of shares of stock that people want to buy. b. the stock market is informationally efficient. c. stock prices never follow a random walk. d. All of the above are correct.
Suppose the demand for Tesla cars decreases and the supply of Teslas increases. What effect will it have on the equilibrium price for Tesla cars?
a. There will be no change b. Uncertain c. It will fall d. It will rise