Refer to the accompanying figure. If the government imposed a price ceiling of $40, what would happen in this market?
A. The equilibrium quantity would fall.
B. The price ceiling would have no effect.
C. There would be excess demand.
D. There would be excess supply.
Answer: B
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In the above figure, the shift in the demand curve from D to D1 can be the result of
A) a decrease in income if pizza is a normal good. B) a decrease in the price of a sub sandwich, a substitute for pizza. C) an increase in the price of soda, a complement to pizza. D) an increase in the number of teenagers, all of whom demand more pizza than do other age groups. E) new technology that increases the profit from producing pizza.
The production possibilities frontier of an economy is based on the assumption that the: a. amount of consumer goods produced in the economy is constant during a given year. b. quality of labor available in the economy is variable during a given year
c. patent laws applicable in the economy are constant during a given year. d. level of technology available in the economy is variable during a given year. e. economy can either produce capital goods or consumer goods during a given year.
Explain the difference between the international trade effect, which leads to a movement along a given AD curve, and an increase in foreign incomes, which leads to a shift to a new AD curve
Refer to the graph below. At its equilibrium level of output, this monopolist earns:
A. Positive economic profits
B. Negative economic profits
C. Zero economic profits
D. Zero revenues