One major reason for the law of demand is that
A) one price changing requires at least one other price to change in the opposite direction.
B) people substitute relatively lower-priced goods for relatively higher-priced goods.
C) a higher price never reduces quantity demanded by enough to lower total revenue.
D) people are willing to produce more units at a higher price.
B
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Refer to Table 4.1, which shows Flo's and Rita's individual supply schedules for frozen latte-on-a-stick. Assuming Flo and Rita are the only suppliers in the market, if the market quantity supplied is 3, the price must be
A) $0. B) $2. C) $4. D) $5.
Compared to the past, FOMC meetings are now much more transparent. How might this transparency impact the effectiveness of monetary policy actions?
A) The transparency helps make the Fed's actions more credible and should help make policy actions more effective. B) The transparency undermines the effectiveness since financial markets can more quickly adjust their behavior to fight the policy actions. C) The transparency counteracts the secrecy in which fiscal policy is enacted, and therefore decreases its effectiveness. D) The transparency lengthens policy lags, so monetary policy takes longer to implement and take effect.
A multiplant firm has equated marginal costs at each plant. By doing this
A) profits are maximized. B) costs are minimized given the level of output. C) revenues are maximized given the level of output. D) none of the above
A car sells at different prices at different dealerships in a local market. If a consumer has imperfect information about the price of a car at each dealership, he should
a. always gather all available information about prices. b. gather information about prices until the expected marginal benefit of more information equals the marginal cost of gathering it. c. gather information about prices only if it can be gathered without cost. d. ignore information about prices because it is irrelevant to making an "optimally imperfect" decision.