When a good suddenly becomes more scarce in a free market, caused by a significant increase in consumer demand, then
A) it is a clear sign that households have become more greedy.
B) the price will tend to rise rapidly in light of the greater scarcity.
C) suppliers will gain in the exchange and buyers will lose.
D) the law of demand will be contradicted because people will be buying more, not less, at a higher price.
E) all of the above are true.
B
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A public recreation area that has become unpleasantly crowded is exhibiting a negative externality that is frequently associated with:
A. bargaining. B. Pigouvian policies. C. public goods. D. common property resources.
Income on the horizontal axis at which the vertical distance to the 45-degree line is less than the vertical distance to the Ep line gives rise to ________-than-equal planned expenditures, and so we must be ________ the equilibrium level of income
A) less, below B) less, above C) greater, below D) greater, above
Which of the following fiscal policy actions would definitely cause a reduction in the size of an inflationary gap?
A) cuts in taxes and increases in government spending B) increases in government spending C) increases in taxes D) cuts in taxes
A government policy to improve farm incomes by supporting agricultural prices at a level above equilibrium will reduce consumer's surplus
Indicate whether the statement is true or false