When the price of a good rises, there is
A. an increase in supply.
B. a decrease in supply.
C. an increase in quantity supplied.
D. a decrease in quantity supplied.
Answer: C
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An explanation for how the price of water can be less than the price of diamonds, even though water is more valuable, is that
a. price is a poor guide to value. b. markets for water and diamonds are not competitive. c. price reflects marginal value, not total value. d. diamond production requires more labor, and value is based on labor.
An investor who bases the decision to buy an asset solely on the expected return of an asset is considered to be:
A) risk loving B) risk averse C) risk neutral D) risk avoiding
A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of
A) production associated loss and inefficiency loss. B) productive consumption loss and protection loss. C) consumption distortion loss and production distortion loss. D) consumer misperception loss and taxation loss.
Automatic fiscal policy instruments include
A) Government contracts. B) Regressive income tax rate schedule. C) Unemployment compensation. D) None of the above.