The stricter the enforcement of a price ceiling, the
A) smaller is the difference between the black market price and the legal market price of the good.
B) larger is the difference between the black market price and the legal market price of the good.
C) greater is the amount of the good available in total, from either the legal market or the black market.
D) Both answers B and C are correct.
B
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Suppose England has a comparative advantage over the United States in producing tea. If this is true, then:
A. England should produce more tea than it wants and sell the rest to the United States. B. England should produce a small amount of tea and buy the rest of the tea it wants from the United States. C. England should not produce tea, and should instead buy it all from the United States. D. the United States has nothing to gain from buying tea from England.
Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?
In markets characterized by oligopoly,
a. the oligopolists earn the highest profit when they cooperate and behave like a monopolist. b. collusive agreements will always prevail. c. collective profits are always lower with cartel arrangements than they are without cartel arrangements. d. pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market.
If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would
a. not reduce the shortage of organs. b. benefit rich people but not poor people. c. be inefficient because markets are not good at allocating scarce resources. d. be inferior to a plan imposed by a benevolent dictator.