Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in
A) a surplus of electricity in the electricity market.
B) an increase in the price of electricity to $.25 per kilowatt hour.
C) an increase in producer surplus.
D) a deadweight loss.
D
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The United Company competes with many other firms each producing slightly different products. Firms freely enter and exit this industry. The type of industry United Company operates in is
A) a monopoly. B) monopolistic competition. C) oligopoly. D) perfect competition. E) oligopolistic monopoly.
If an increase in government spending of 40 units accompanied by an equal increase in taxes caused equilibrium income to rise by 40 units, the autonomous expenditure multiplier must be
a. 10. b. 1. c. 4. d. not enough information is given to calculate the multiplier.
Politicians face strong incentives to favor _____ over _____
a. the rich; the middle class b. special interests; the public interest c. the rationally ignorant; special interests d. the future; the present
The value of cross-price elasticity of demand between orange soda and grape soda is
a. negative b. positive c. 0 d. between -1 and 0 e. less than -1