When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?
a) supply and demand
b) excess demand
c) equilibrium
d) price floor
Ans: c) equilibrium
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If penalties for trading illegal drugs are instituted on both buyers and sellers, the
A) quantity might increase or decrease but the price will rise. B) price might rise or fall, but the quantity will decrease. C) price and the quantity will both decrease. D) price and the quantity will both increase.
The cost to firms of changing prices
A) is called a menu cost. B) is small even when there is rapid inflation. C) does not exist if inflation is perfectly anticipated. D) all of the above
All of the following are assumptions of monopolistic competition EXCEPT
A) many buyers and sellers. B) homogeneous product. C) easy entry of new firms in the long run. D) profit-maximizing behavior.
Which of the following is not a form of money?
a. checkable deposits b. travelers' checks c. currency d. credit cards