In a perfectly competitive market in the short run, as the market demand increases, the firms ________ their output and their economic profit ________
A) increase; increases
B) increase; decreases
C) decrease; decreases
D) decrease; increases
A
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Gasoline is a normal good. If the price of gasoline falls, a consumer buys more gasoline because of
A) only an income effect. B) only a substitution effect. C) an increase in the marginal rate of substitution. D) both an income effect and a substitution effect.
If a binding price floor were placed in the market in the graph shown:
A. quantity demanded would exceed quantity supplied.
B. quantity supplied would exceed quantity demanded.
C. the demand curve would have to shift.
D. the supply curve would have to shift.
When the price of hot dogs at the supermarket increases, the quantity demanded of hot dog buns declines. This situation describes:
a. the income elasticity of demand for hot dogs. b. the income elasticity of demand for hot dog buns. c. the price elasticity of supply for hot dogs. d. the negative cross-price elasticity of demand for hot dogs and hot dog buns. e. the positive cross-price elasticity of supply for hot dogs and hot dog buns.
Which of the following is an example of a bank functioning as a financial intermediary?
a. Bank A, which has a vault facility where its clients can keep their valuable documents b. Bank B, which has an excellent reputation for stability and sound investment c. Bank C, which pays its employees better than average salaries d. Bank D, which provides many small businesses with start-up capital