The quantity effect of a price reduction causes:
A) a decrease in revenue because of a lower price.
B) an increase in revenue because of increased sales.
C) an increase in labor demand due to increased sales of the product.
D) a decrease in labor demand because of a lower price of the final product.
B
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Suppose you purchase a new home for $150,000, making a down payment of 10% and taking out a mortgage on the balance. What is the return on your investment in your home if one year later the price of your home decreases by 20%?
A) -10% B) -30% C) -50% D) -200%
Given that most people like the smell of baking cinnamon rolls and dislike the smell of burning tires, baking cinnamon rolls generates ________ externality, and burning tires generates ________ externality.
A. no; a negative B. a positive, no C. a positive; a negative D. a negative; a positive
Assume initially that the price of X (measured on the horizontal axis) is $9 and the price of Y (measured on the vertical axis) is $4. If the price of X now declines to $6, the budget line will:
A. be unaffected. B. shift outward on the vertical axis. C. shift inward on the horizontal axis. D. shift outward on the horizontal axis.
A gas tax holiday would
A. affect the market for gasoline. B. affect the level of congestion on roads. C. affect the market for air travel. D. All of the above are correct.