Because of scarcity, rationing is
A) unimportant because people get what they want.
B) necessary because people cannot get everything they want.
C) unimportant because prices clear markets.
D) not a problem because governments can determine what everybody wants.
Answer: B
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A Herfindahl-Hirschman Index is calculated by
A) summing the amount of sales by the four largest firms and dividing by total industry sales. B) summing the squares of the market shares of each firm in the industry. C) dividing the number of firms wanting to merge by the total number in the industry. D) dividing the advertising expenditures of the firms that want to merge by total industry advertising expenditures.
People often complain about price gouging after a disaster such as a hurricane. Suppose the government successfully prevented price increases due to the disaster. We would expect
A) reconstruction to take longer because the quantity supplied of new materials would increase more slowly. B) reconstruction to take less time because the demand for materials would increase faster. C) reconstruction never to occur. D) reconstruction to take less time because the government could rebuild more quickly when people are not in the way.
Draw in a new demand curve, D1, on the graph, showing a decrease in demand What happens to price and quantity?
What assumptions are necessary to argue that the quantity equation implies that increases in the money supply lead to proportional changes in the price level?