Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that law of demand does not apply to
corn?
A. Yes, because there is a direct relationship between the price of corn and the quantity supplied
B. Yes, because there is an inverse relationship between the price of corn and the quantity demanded
C. No, because the other-things-equal assumption was violated over the two year period
D. No, because the evidence indicates that there is a shortage of corn
Answer: C
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Which of the following would be categorized as an implicit cost?
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The McDonald's restaurants in Russia grow their own potatoes to guarantee that they are grown correctly. Growing potatoes is very different from running a fast-food restaurant. One could say of McDonald's decision to grow its own potatoes for the Russian franchise that
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Overt collusion is relatively rare because: a. they are illegal in some countries, including the United States. b. members find it difficult to agree on key decisions
c. members frequently have an incentive to cheat on the cartel. d. of all the above reasons.
If the federal government increases the amount of Social Security benefits for retired persons, then the
a. consumption schedule will shift upward. b. aggregate demand curve will shift outward. c. effect on equilibrium GDP will be the same as a cut in taxes. d. All of the above are correct.