According to the above table, the market clearing (equilibrium) price would adjust to
A. $3.
B. $1.
C. $5.
D. $4.
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
The producers of externalities prefer _____ to _____
a. corrective taxation; regulation b. regulation; subsidization c. competition; subsidization d. regulation; corrective taxation
If 2014 is the base year, what is the price index for a market basket of goods for 2015 in the above table?
A) 97.3 B) 102.8 C) 128.0 D) Zero, since the price of CDs fell and the price of gasoline increased
Under the principle of comparative advantage total output is greatest when each product is made by the country that
A. enjoys an absolute advantage. B. has the lowest opportunity cost. C. has the lowest wage rates. D. has the lowest degree of specialization.