When the supply and/or demand curve shift, the new market clearing price is
A) reached instantaneously.
B) reached only after the government intervenes in the market.
C) reached after some period of adjustment.
D) never reached.
Answer: C
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Mick Jagger, a former student at the London School of Economics, once sang, “You can’t always get what you want, but if you try sometime, you just might find you can get what you need.” Another statement of the basic economic principle expressed in this lyric is that
A. rational decisions are not always possible. B. you can allocate your resources to what gives you the highest value. C. you can create the supply to meet your own demand. D. you can maximize social welfare by making optimal decisions.
If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then:
A. it is encountering diseconomies of scale. B. it is encountering economies of scale. C. the law of diminishing returns is taking hold. D. the firm's long-run ATC curve will be rising.
A union that pursued a policy of restricting entry over time into the union would
A. see real wages hold constant over time at whatever premium they could get initially. B. generate rising real wages for its membership over time as long as demand for union workers increased over time. C. also have to negotiate to be sure that all the members were able to find jobs. D. fail to obtain benefits for their workers in excess of what the workers would get under open markets.
The concept of equity would explain the redistribution from the rich to the poor which is achieved from a tax system that requires taxes to
A. be unrelated to income. B. remain stable when income rises. C. fall when income rises. D. rise when income rises.