If a good's price increases by 2 percent, then its quantity supplied increases by more than 2 percent. This means
A) supply is elastic.
B) supply is unit-elastic.
C) supply is inelastic.
D) the good has good substitutes.
Answer: A
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If an individual's opportunity cost of commute is $300 per month and his monthly commuting time is 60 hours, his opportunity cost of time is:
A) $10 per hour. B) $5 per hour. C) $30 per hour. D) $60 per hour.
Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?
A) consumers, who purchase more units of the product than they did before the price support program was implemented B) taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place C) producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues D) the government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program
Which of the following must necessarily occur as the quantity of output increases?
a. Average total cost must rise. b. Average variable cost must rise. c. Average fixed cost must fall. d. Marginal cost must rise.
Government controls over market prices frequently "backfire."
a. True b. False Indicate whether the statement is true or false