During the Obama administration, the development of low-cost batteries for electric cars received large amounts of federal funding in terms of subsidies. Meanwhile, American households gave a higher priority towards minimizing their environmental impact. Consider the market for zero-emissions electric vehicles where there is an upward-sloping supply curve and a downward-sloping demand curve. What will happen to the equilibrium price?
A. Price increases.
B. Price decreases.
C. Change is ambiguous.
D. Price remains constant.
Answer: C. Change is ambiguous.
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Holding other factors constant, if the education and skills of the typical worker in an economy increases, then the real wages of workers will ________ and employment of workers will ________.
A. decrease; not change B. increase; increase C. decrease; increase D. increase; decrease
"People who have dental insurance don't floss often enough." This is an example of
A) asymmetric information. B) bad parenting. C) moral hazard. D) risk adverse behavior
Which of the following is not a reason for the existence of a monopoly?
a. sole ownership of a key resource b. patents c. copyrights d. diseconomies of scale
In the new Keynesian model, expected inflation is a function of ________
A) expected future output gaps and markup shocks B) current and past inflation C) unanticipated aggregate demand shocks D) expected growth of the money supply