As a result of a shortage,
A. Producers reduce supply.
B. Producers increase output and raise price.
C. Government purchases decrease.
D. Consumers increase demand for the product.
Answer: B
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If a price ceiling on coffee is set above the market-clearing price, then
A) the quantity of coffee demanded will decrease. B) the quantity of coffee supplied will increase. C) the quantity demanded for coffee will increase. D) all of the above will occur. E) none of the above will occur.
Fungibility means that
a. donors allow recipients to use aid money for any purpose they want b. even if aid money is specified for a project, this frees up a similar amount for other uses c. aid money is given for programs that allow recipients to choose how to use it, within specific limits d. aid money is given in the local currency so its source is unidentifiable e. all of the above
Shirley can choose between peanut butter pretzels and caramel coated popcorn for her evening snack. According to economists, her _____ cost of consuming caramel coated popcorn would be the forgone peanut butter pretzels
a. internal b. opportunity c. average d. transaction e. social
Which of the following is true about inflation?
a. Inflation increases purchasing power. b. Inflation redistributes income to savers. c. Inflation shows the real value of goods and services. d. Inflation distorts the signals of value people gain from prices.