If changes in demand cause significant changes in equilibrium price, then supply must be quite inelastic.
a. true
b. false
Answer: a. true
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Claire has just eaten her second bowl of cereal. We can say:
A. her second bowl likely reduced her total utility. B. her second bowl likely added less to her total utility than the first. C. her third bowl will likely decrease her total utility. D. her third bowl will likely increase her total utility by at least as much as the second.
What will tend to happen to wages if workers and employers foresee inflation?
a. Both parties will seek to reduce nominal wages and therefore keep real wages the same. b. Nominal wages will remain constant but real wages will increase to avoid the effects of inflation. c. Inflation erodes purchasing power of workers, and real wages are unchanged. d. Nominal wages will increase by an amount that keeps real wages constant.
If the Fed increases the money supply,
a. the interest rate increases, which tends to raise stock prices.
b. the interest rate increases, which tends to reduce stock prices.
c. the interest rate decreases, which tends to raise stock prices.
d. the interest rate decreases, which tends to reduce stock prices.
Supply and demand analysis can explain:
A. the initial set of property rights but not how much rent will accrue to a landholder. B. neither the initial set of property rights nor how much rent will accrue to a landholder. C. how much rent will accrue to a landholder and the initial set of property rights. D. how much rent will accrue to a landholder but not the initial set of property rights.