If pencils and paper are complements for most consumers, then if the price of paper increases, you would expect:
A. the equilibrium price of pencils to rise and the equilibrium quantity of pencils to fall.
B. the equilibrium price and quantity of pencils to fall.
C. the equilibrium price and quantity of pencils to rise.
D. the equilibrium price of pencils to fall and the equilibrium quantity of pencils to rise.
Answer: B
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A. prices in 2005 were higher than in 2004 B. prices in 2005 were lower than in 2004 C. output in 2005 was higher than in 2004 D. output in 2005 was lower than in 2004
Consider that a cartel is functioning at full effectiveness. If the cartel's marginal cost of production increases, the cartel's profit-maximizing price
A. also increases. B. initially decreases and then increases. C. decreases. D. remains constant.
In the circular flow model, the value of total income for an economy ________ the value of total production
A) equals B) is greater than C) is less than D) may be greater than or less than
For a person to keep his real income steady at a certain level from one year to the next, his nominal income must:
A. Rise if the price index falls B. Stay the same as the price index rises C. Fall if the price index rises D. Rise as fast as the price index