Suppose the market-clearing price of milk is $3.00 per gallon, but the diary industry persuades the government to establish a legally-mandated price support at $4.00 per gallon. The newly legislated price tends to
A) reduce the demand for milk.
B) increase the production of milk.
C) create a shortage of milk.
D) decrease the price of milk products.
B
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A demerit good is a good that __________
Fill in the blank(s) with the appropriate word(s).
If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money
A) is $2 trillion. B) is $5 trillion. C) is $20 trillion. D) cannot be determined from the information given.
Which of the following explains why higher prices in the goods and services market will lead to an upward sloping short-run aggregate supply curve?
a. The higher prices will temporarily improve profit margins because many of the cost components of firms will be fixed in the short run. b. The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate additional output. c. The higher prices will expand the economy's resource base and, thereby, stimulate additional output. d. The higher prices will improve technology and, thereby, stimulate additional output.
Torrie is thinking of starting up a small business selling hand-painted wine glasses. She is considering setting up her business as a sole proprietorship. What is one disadvantage to Torrie of setting up her business as a sole proprietorship?
A) As a sole proprietor, Torrie would be taxed twice. B) As a sole proprietor, Torrie would not have control of the business. C) As a sole proprietor, Torrie would face unlimited liability. D) As a sole proprietor, Torrie would be subject to significant rules and regulations.