Whenever net external benefits exist then:
A.) economic profits are zero.
B.) the social demand exceeds the market demand.
C.) the benefits associated with a product fall short of those accruing to the market.
D.) product differentiation increases the variety of products available to consumers.
B.) the social demand exceeds the market demand.
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When we compare the records of the CPI and the PCE price index over time, the
A) two are very different in magnitude. B) PCE price index tends to exceed the CPI. C) CPI tends to exceed the PCE price index. D) two measures are identical. E) CPI tends to exceed the PCE price index when inflation is high, and the PCE price index tends to exceed the CPI when inflation is low.
When talking about demand, price elasticity refers to the
a. price flexibility in response to demand changes. b. adaptability of suppliers to price changes. c. responsiveness of buyers to price changes. d. ability to stretch one’s budget by making wise choices.
A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market?
a. an increase in supply, higher equilibrium price, and lower equilibrium quantity b. a decrease in supply, lower equilibrium price, and lower equilibrium quantity c. an increase in supply, lower equilibrium price, and higher equilibrium quantity d. an increase in supply, higher equilibrium price, and higher equilibrium quantity e. a decrease in supply, lower equilibrium price, and higher equilibrium quantity
If consumer desire for product X increases, all of the following will occur except:
A. an increase in the profits of industry X. B. an increase in the quantity of resources employed by industry X. C. an increase in the output of industry X. D. a decrease in the quantity of resources employed in industry X.