Which one of the following statements is TRUE?
A) An effective price ceiling results in a surplus of the good.
B) An effective price floor results in a shortage of the good.
C) When the market clearing price of a good is the equilibrium, then everyone can afford it.
D) The market clearing price of a good reflects its relative scarcity.
Answer: D
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If the government uses its budget surplus to finance additional government purchases or tax cuts, crowding out will
A. not occur. B. occur to a greater degree. C. still occur, but to a lesser degree. D. occur more rapidly.
Suppose that a firm is currently earning revenues that are smaller than its total costs. The firm's managers are trying to decide whether or not the firm should shut down in the short run
On what information should the manager's decision be based?
Under the Bretton Woods system, international debts were settled in:
a. gold. b. U.S. dollars. c. British pounds. d. silver. e. German marks.
When negative externalities are present in a market,
a. producers will be affected but consumers will not. b. producers will supply too much of the product. c. demand will be too high. d. the market will still maximize total benefits.