Suppose a competitive market is in equilibrium at price P' and quantity Q'. If the demand curve becomes less elastic, but the same price-quantity equilibrium is maintained, what happens to consumer and producer surplus?
A) Both PS and CS increase
B) CS increases and PS decreases
C) CS increases and PS remains the same
D) Both CS and PS decrease
C
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The Consumer Expenditure Survey measures
A) households' spending patterns. B) the wholesale price on what consumers buy so that a markup percentage can be found. C) the maximum price buyers will pay for a good or service. D) consumers' incomes. E) the jobs at which consumers work.
Charlie's Chimps is a perfectly competitive firm that produces cuddly chimps for children. The market price of a chimp is $10, and Charlie's produces 100 chimps. The marginal cost of the 100th chimp is $9. Charlie's ________
A) is maximizing its profit B) will maximize its profit if it produces more than 100 chimps C) will maximize its profit if it lowers the price to $9 a chimp D) will maximize its profit if it produces fewer than 100 chimps
An outright purchase of government securities by the Fed
A) permanently increases bank reserves. B) temporarily increase bank reserves. C) permanently reduces bank reserves. D) temporarily reduces bank reserves.
The Japanese economy has been consistently weak throughout the 1990s. This has caused a slight deflation, illustrating the
a. negligible cost of eliminating inflation. b. very slow operation of the economy's self-correcting mechanism. c. tendency of inflation to accelerate during recessions. d. rapidity with which inflation can be stopped.