Suppose that the market for engagement rings is in equilibrium. Then political unrest in South Africa shuts down the diamond mines there. South Africa is the world's primary supplier of diamonds. What will happen?
A. The supply of engagement rings will increase.
B. The equilibrium quantity of engagement rings will decrease.
C. The demand for engagement rings will decrease.
D. The equilibrium price of engagement rings will decrease.
Answer: B
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Suppose that in a market for used cars, there are good used cars and bad used cars (lemons). Consumers are willing to pay as much as $9,000 for a good used car but only $3,000 for a lemon
Sellers of good used cars value their cars at $7,500 each and sellers of lemons value their cars at $1,500 each. Buyers cannot tell if a used car is reliable or is a lemon. Based on this information, what is the likely outcome in the market for used cars? A) Sellers of lemons will drop out of the market. B) Sellers of good used cars will drop out of the market. C) Used cars will sell for $6,000. D) Sellers of good used cars will incur losses.
The expected real interest rate (r) is equal to
A) nominal interest rate minus inflation rate. B) nominal interest rate minus expected inflation rate. C) expected nominal interest rate minus inflation rate. D) nominal interest rate plus expected inflation rate.
Compared to 1870, the average worker today in the United States, Britain, France, Germany, and Japan works more than
A. 1,000 more hours a year. B. 500 more hours a year. C. The same number of hours a year. D. 500 less hours a year. E. 1,000 less hours a year.
Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.
Answer the following statement true (T) or false (F)