In competitive markets, a surplus or shortage will
A. cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage.
B. cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.
C. cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage.
D. never exist because the markets are always at equilibrium.
Answer: B
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Hot dogs and hot dog buns are found to be related by the cross elasticity of demand. If they are complementary goods, the cross elasticity will be
A. positive. B. equal to zero. C. negative. D. unknown.
A relatively steep money demand schedule reflects the assumption that the interest elasticity of money demand is
a. low (in absolute value). b. high (in absolute value). c. zero. d. indefinite.
Because of the law of diminishing returns, _____
a. economic growth rate begins to diminish as capital deepening increases b. GDP per capita decreases as capital per unit of labor decreases c. the average cost of production decreases as output in an economy increases d. the marginal cost of production decreases as output in an economy increases
The perfectly competitive market structure benefits consumers because
A) firms do not produce goods at the lowest possible price in the long run. B) firms are forced by competitive pressure to be as efficient as possible. C) firms add a much smaller markup over average cost than firms in any other type of market structure. D) firms produce high-quality goods at low prices.