Which of the following is not true of equilibrium price?
A. All consumers can buy all they demand.
B. It is determined by the interaction of supply and demand.
C. It is set by the government.
D. It is also known as the market-clearing price.
C. It is set by the government.
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Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000 . but liabilities are $175,000 . You also have, however, stock in General Motors worth $200,000 . If you file bankruptcy, what amount of personal assets do you stand to lose?
a. $100,000 b. $75,000 c. $200,000 d. $275,000 e. $375,000
Externalities are unintended costs or benefits that are imposed on unsuspecting people and that result from:
a. poor planning. b. intentional damages. c. excessive costs. d. excessive losses. e. the economic activity of others.
Suppose product price is $24; MR = MC at Q = 200; AFC = $6; AVC = $16 . What do you advise this competitive price-taker firm to do?
a. Increase output. b. Decrease output. c. Shut down operations. d. Stay at the current output; the firm is earning a profit of $400. e. Stay at the current output even though the firm is losing $200.
All the following are assumptions of the classical model EXCEPT
A) pure competition exists.
B) buyers and sellers react to nominal money prices rather than to relative prices.
C) wages and prices are flexible.
D) people are motivated by self-interest.