An increase in oil prices may cause
A. market equilibrium.
B. market price reductions.
C. a reduction in the quantity of oil demanded.
D. demand to curve to the right.
Answer: C
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Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.75 generates for every additional $100 of real GDP
A) $25 of additional saving. B) $56.25 of additional consumption spending. C) $25 of additional saving and taxes. D) $75 of additional real disposable income.
Bank capital has both benefits and costs for the bank owners. Higher bank capital ________ the likelihood of bankruptcy, but higher bank capital ________ the return on equity for a given return on assets
A) reduces; reduces B) increases; increases C) reduces; increases D) increases; reduces
Consumers value the product-specific services for a new smartphone at $25 and the marginal cost to the retailers for providing the product-specific services is $20. If the retailers provide the product-specific services, which of the following is true?
A) The shift in the market demand will equal the shift in the market supply. B) The shift in the market demand will exceed the shift in the market supply. C) The shift in the market supply will be exactly double the shift in the market demand. D) The shift in the market supply will exceed the shift in the market demand.
If resources are allocated efficiently in a market economy:
A. each person's utility is maximized, and so the result is Pareto optimal. B. the outcome will always be socially desirable. C. the way final goods and services are distributed does not matter to society. D. the outcome may not be socially desirable if distributional issues are also important.