If supply increases and demand decreases,
A. the market clearing price definitely rises, and the effect on the equilibrium quantity is indeterminate.
B. the market clearing price definitely rises, and the equilibrium quantity definitely falls.
C. the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate.
D. the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely falls.
Answer: C
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In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is
A) below the market price. B) at the market price. C) above the market price. D) below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic.
A key assumption in the segmented markets theory is that bonds of different maturities
A) are not substitutes at all. B) are perfect substitutes. C) are substitutes only if the investor is given a premium incentive. D) are substitutes but not perfect substitutes.
A competitive market maximizes social welfare because in a competitive market,
A) profits are zero. B) price equals marginal cost of the last unit produced. C) price equals average cost of the last unit produced. D) there is free entry and exit.
The supply curve represents the relationship between:
A. price and quantity supplied with everything else held constant. B. income and quantity supplied with everything else held constant. C. consumer preferences and quantity supplied with everything else held constant. D. income and price supplied with everything else held constant.