If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?
a. The demand for wood furniture will decline, and furniture prices will fall.
b. There will be a shortage of wood furniture.
c. There will be a surplus of wood furniture.
d. The supply of wood furniture will decline, and furniture prices will increase.
D
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Federal sources of revenue and outlays are shown in Figure 10.3
What will be an ideal response?
We study the simple model of competitive markets because it helps to:
A. show how poorly the economy actually functions. B. provide useful insights to markets that are not perfectly competitive. C. indicate whether buyers or sellers matter more. D. show how the government controls the economy.
What does the equilibrium of supply and demand in a market do?
a) It maximizes the prices at which producers are willing to sell. b) It minimizes the prices that consumers are willing to pay. c) It produces both an efficient and equitable market outcome. d) It maximizes the total benefits received by buyers and sellers.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.