Suppose the market for pizza slices is in equilibrium at a price of $1 per slice. What conditions are likely to be satisfied in the pizza slice market?
What will be an ideal response?
The conditions that are satisfied when the market for pizza slices is in equilibrium are:
a) The number of pizza slices manufactured by sellers will equal the number of pizza slices purchased by buyers.
b) Pizza sellers will produce pizzas at the point where the cost of production is less than or equal to the market price of $1.
c) Buyers will consume pizza as long as the benefit that they derive from consumption is at least equal to the market price of $1.
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Which of the statements below best illustrates the use of the market process in determining the allocation of scarce resources?
A) "Let's make this product because this is what we know how to do best." B) "We should consider shifting to products where we can earn even more money." C) "Everyone is opening video stores, why don't we?" D) "We can't stop making this product. This product gave our company its start."
The major drawback of a binding price ceiling is: a. it causes a surplus
b. government regulations of this kind are difficult to enforce c. it causes a shortage. d. none of the above; there is no drawback.
Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be: Demand: Qd = 10,000 ? 10,000P + 1.0MSupply: Qs = 80,000 + 10,000P ? 4,000PIwhere Q is quantity, P is the price of the product, M is income, and PI is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and PI for 2015:
= $50,000 and 
I = $20The manager also estimates the average variable cost function to beAVC = 3.0 ?
0.0027Q + 0.0000009Q2Total fixed costs will be $2,000 in 2015. The manager ________ produce since ________. A. should not; $2 < $2.15 B. should not; $0.50 < $1.00 C. should; $2.75 > $0.75 D. should; $3 > $0.975
Answer the following statement(s) true (T) or false (F)
1. The aggregate demand curve can shift to the right or left due to changes in price levels. 2. A decrease in a nation’s population will increase aggregate demand. 3. A fall in incomes abroad can reduce U.S. net exports and cause a leftward shift in the U.S. aggregate demand curve. 4. Input prices are said to be sticky in the long run. 5. The misperception effect involves a false perception about relative prices.