Demand curves slope ________ because as the price increases and other things remain the same, the quantity demanded ________
A) downward; decreases
B) downward; increases
C) upward; decreases
D) upward; increases
E) downward; does not change
A
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Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. If in the short run the number of firms is fixed and their fixed costs are sunk, the short run market supply function is:
A. Qs = 40P if price is greater than $20. B. Qs = P/4 if price is greater than $20. C. Qs = 2.5P if price is greater than $20. D. Qs = 300 - 10P for all prices.
An asset market is said to experience a speculative bubble when
a. the price of the asset rises above what appears to be its fundamental value. b. the price of the asset appears to follow a random walk. c. the market cannot establish an equilibrium price for the asset. d. the asset is a natural resource and its supply is manipulated by foreign nations and foreign firms.
Consider two investors: one is risk-neutral and the other is risk-averse. How do they each assess a risk premium?
What will be an ideal response?
A major difference between the transactions demand for money and the precautionary demand is that the
A. transactions demand means that people are foregoing interest but they are not foregoing interest in the precautionary demand. B. transactions demand involves expected expenditures while the precautionary demand involves unexpected expenditures. C. transactions demand is for emergencies while the precautionary demand is for every day expenditures. D. transactions demand leads to the purchase of assets while the precautionary demand does not.