If producers incorrectly set the price of their product too low:
A. equilibrium will result.
B. the industry will die out soon.
C. a shortage will result.
D. a surplus will result.
Answer: C
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The price elasticity of demand ________ in value when moving downward along a ________ line demand curve
A) falls; straight B) rises; curved C) falls, curved D) rises; straight
Suppose that an industry is characterized by a few firms and price leadership. We would expect that:
A. price would equal marginal cost. B. price would equal average total cost. C. price would exceed both marginal cost and average total cost. D. marginal revenue would exceed marginal cost.
How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?
A. In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. B. In the economy represented by a straight-line production possibilities curve, neither good is scarce. C. In the economy represented by a straight-line production possibilities curve, there is no opportunity cost. D. In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced.
Other things equal, the interest rate on a loan will be larger:
A. The less the risk involved B. The larger the amount of the loan C. The longer the length of the loan D. If loan interest is exempt from taxation