When the price of corn was "low," consumers in the United States spent a total of $8 billion annually on its consumption. When the price halved, consumer expenditures actually DECREASED to $6 billion annually. This indicates that:
A. the demand for corn is elastic.
B. the demand for corn is inelastic.
C. corn is a Giffen good.
D. the demand curve for corn is upward sloping.
Answer: B
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Giving presents on Christmas does NOT generate a deadweight loss if
A) all gift are money. B) everybody gets exactly want she wants. C) nobody can be made better off by returning the gift and purchasing a different one. D) All of the above.
The classic example used to discuss the problem of adverse selection is:
A. fruit and produce markets, such as lemons. B. drivers with insurance who tend to drive more recklessly. C. the imbalance of information that exists between a buyer and seller of a used car. D. workers who shirk when their effort isn't closely monitored.
Refer to the graph shown.
A monopolist that efficiently produces the profit-maximizing level of output would have per-unit cost equal to:
A. A. B. B. C. C. D. D.
In 1950, a phone call at a pay phone cost 5 cents and a first-class stamp cost 3 cents. Today, those prices are 50 cents and 49 cents respectively. What has happened to the price of each good relative to the other? What has happened to the price of each
good relative to all other goods? What will be an ideal response?