Equilibrium in a market is
A. a situation in which there are no inherent forces that produce change.
B. the natural state of affairs in the market.
C. the actual price and quantity that will exist in a market.
D. the best price and quantity that can exist in a market.
E. All of these responses are correct.
Answer: A
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When a good suddenly becomes more scarce in a free market, caused by a significant increase in consumer demand, then
A) it is a clear sign that households have become more greedy. B) the price will tend to rise rapidly in light of the greater scarcity. C) suppliers will gain in the exchange and buyers will lose. D) the law of demand will be contradicted because people will be buying more, not less, at a higher price. E) all of the above are true.
When a foreign company engages in riskier behavior after it has received international investment funds, it is known as
A) portfolio investment. B) moral hazard. C) foreign direct investment. D) adverse selection.
Under an emissions tax program, the government sets ____; under an emissions permits program, the government sets ____
a. the price of the right to pollute; the price of the right to pollute b. the price of the right to pollute; the permitted total quantity of pollution c. the permitted total quantity of pollution; the price of the right to pollute d. the permitted total quantity of pollution; the permitted total quantity of pollution
For Matthew, the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This
A. implies that Matthew maximizes utility by consuming 9 sodas per day. B. is impossible because each additional unit of consumption of any good must provide positive marginal utility. C. implies that Matthew's demand curve for sodas per day will become upward sloping at 10 sodas per day. D. implies that at a zero price Matthew's demand curve will intersect the quantity axis at 10.