Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?
A. $37
B. $50
C. $45
D. None of these could represent Eli's willingness to pay.
Answer: A
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Use the economic way of thinking to answer the following question: Does a diabetic need insulin?
A) No B) Yes, and therefore diabetics will always buy all what they need. C) Probably, but diabetics often find substitutes for insulin in the real world. D) Probably, but diabetics only care about the expected cost of insulin and ignore the expected benefits.
Suppose all firms have constant marginal costs that are the same for each firm in the short run. In this case, the market level supply curve is ________ and producer surplus equals ________:
A) perfectly inelastic, fixed costs B) perfectly inelastic, zero C) perfectly elastic, fixed costs D) perfectly elastic, zero
Which of the following is false?
A. In general, the deregulation of the airlines and interstate trucking industries led to higher costs and higher prices. B. Since the early 1980s the size of companies acquired in mergers has been getting larger. C. The rule of reason is partially in force today as firms are subject to prosecution if they control 60% of the relevant market and have behaved badly toward their competitors. D. When two firms in the same industry form one larger company it is called a horizontal merger.
Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because the equilibrium:
A. price and quantity would be too high. B. price would be too low and quantity would be too high. C. price and quantity would be too low. D. price would be too high and quantity would be too low.