"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:
A. the statement is backwards: increased demand leads to lower prices.
B. a falling price of personal computers increases the quantity demanded, not demand.
C. a change in the price of personal computers shifts the demand curve.
D. a change in the price of personal computers shifts the supply curve.
Answer: B
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If regulations create barriers to entry in an industry, the result can be _____
a. efficiency b. monopoly c. monopsony d. higher output
When economists describe the theory of consumer choice, they
a. portray people as simple and methodical with perfectly predictable patterns of behavior. b. assert that consumer's decisions are based on which goods and services give them the greatest utility within their limited incomes. c. point out that consumers rarely consider utility in their purchase decisions; they look at other factors like convenience, peer behavior, and price. d. assert that the retail price is the only variable consumers really consider in making their purchasing decisions. e. admit that consumer behavior is random and there is no credible economic theory to explain the phenomenon.
A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?
a. Supply curves are steeper over long periods of time than over short periods of time. b. Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time. c. The number of firms in a market tends to be more variable over long periods of time than over short periods of time. d. Firms prefer to change their prices in the short run rather than in the long run.
Say that after graduation you live in Manhattan and you walk to work. Then, you got a raise and you take a taxi most days. As a result, GDP would most likely ___.
A. fall B. be unchanged C. rise