According to the law of demand, there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why?
A. when the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change
B. when price increases, quantity demanded increases
C. when the price of a good increases, consumers purchases complementary goods that are now relatively less expensive
D. A and C only
Ans: A. when the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change
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Which describes an oligopoly?
a. one firm producing 95% of the output b. two to four firms producing 70% - 80% of the output c. eight to ten firms producing 60% - 70% of the output d. ten or more firms producing 90% of the output
Use the above table and assume a fixed cost of $200. At an output of 0, total cost is
A. 0.
B. $100.
C. $200.
D. $300.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point F
A. is efficient and attainable. B. cannot be produced with the current state of technology. C. represents underallocation of resources. D. represents what the people want.
How does a per-unit subsidy affect the simple monopoly equilibrium?
a. The subsidy does not affect marginal cost and thus does not affect the monopoly equilibrium. b. The subsidy lowers the price charged by the monopoly, but it also lowers social gain. c. The subsidy increases the monopoly's profit but does not improve social gain. d. The subsidy causes both monopoly output and social gain to increase.