One assumption of the basic model of supply and demand is that:
A. buyers and sellers have enough information to make informed choices.
B. buyers and sellers will benefit equally from a voluntary transaction.
C. sellers will always have more information than buyers.
D. buyers will always have more information than sellers.
Answer: A
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Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price, a
A) shortage exists and the price falls to restore equilibrium. B) shortage exists and the price rises to restore equilibrium. C) surplus exists and the price falls to restore equilibrium. D) surplus exists and the price rises to restore equilibrium. E) surplus exists but nothing happens until either the demand or the supply changes.
According to Tobin's q theory, when equity prices are high the market price of existing capital is ________ relative to new capital, so expenditure on fixed investment is ________
A) cheap; low B) dear; low C) cheap; high D) dear; high
Refer to Figure 2.1. At point C, demand is:
A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic.
_________ arises when a small number of large firms have all or most of the sales in an industry.
a. Perfect competition b. Oligopoly c. Monopolistic competition d. Production efficiency