Suppose the market for Mexican food in your neighborhood was in equilibrium.a. Draw a diagram showing the demand and supply curve for Mexican food. Indicate the market equilibrium quantity and price in this market.b. Suppose the government imposed a binding price ceiling in this market, with the goal of making Mexican food affordable to most residents. Add the price ceiling to your diagram, and then identify the quantity demanded and quantity supply in this market with the price ceiling.c. Would the government be able to make Mexican food affordable to most people with the price ceiling? Explain your answer using the diagram you drew in part (b).
What will be an ideal response?
Figure 2.6 in the text illustrates this problem if Mexican food is substituted for housing. Because less is supplied fewer people have the food.
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How can compensating differentials explain differences in wages across jobs in different industries?
What will be an ideal response?
If the Federal Reserve eliminated all reserve requirements the most likely result would be
A) a large number of depository institution failures because they would not have enough liquidity. B) the Federal reserve would be unable to control the money supply. C) banks would no longer be able to clear checks at the Federal Reserve because there would be no required reserves. D) the size of the money multiplier might fluctuate considerably making the Federal Reserve's job of controlling the money supply more difficult.
The interest rate will fall when the
A. quantity of money demanded exceeds the quantity of money supplied. B. quantity of money supplied exceeds the quantity of money demanded. C. supply of money decreases. D. demand for money increases.
What differentiates an increasing-cost industry from a decreasing-cost industry?
What will be an ideal response?