Starting from a pure exchange equilibrium, an increase in the demand for a commodity will result in:
a. a fall in the market price.
b. a rise in the market price.
c. a rise in the equilibrium output.
d. a fall in the equilibrium output.
B
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Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result,
A) aggregate demand will increase by 2.5%. B) the purchasing power of wages will rise if wages increase by 2.5%. C) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. D) the short-run aggregate supply curve will shift to the left as wages increase.
Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to
A) fall because of the decrease in the quantity of barley sold. B) rise because there will be a shortage of barley. C) rise because the percentage increase in quantity sold is greater than the percentage increase in price. D) rise because the percentage decrease in quantity sold is less than the percentage increase in price.
A subsidy in an industry would be likely to increase the consumer surplus for buyers in that industry and increase the producer surplus for sellers in that industry
a. True b. False Indicate whether the statement is true or false
Sam wins a Mega Millions jackpot worth $3 million. Which of the following is most likely true of Sam's consumption function? a. His consumption function will be flatter
b. His consumption function will be steeper. c. His consumption function will shift upward. d. His consumption function will shift downward.