The market equilibrium quantity:
A. is sometimes the socially optimal quantity.
B. maximizes total economic surplus.
C. is the socially optimal quantity.
D. is not the socially optimal quantity.
Answer: A
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If a country's real GDP grows at 10% per year, its real GDP will double about every
A) 5 years. B) 7 years. C) 10 years. D) 14 years.
What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?
A) Prescription medications will become an inferior good. B) There is an upward movement along the demand curve for prescription medications. C) There is a downward movement along the demand curve for prescription medications. D) The demand for prescription medications will decrease.
Suppose that when the price of root beer rises 10%, the quantity of pizza demanded falls 5%. This would mean that pizza and root beer are
A) substitutes, with a cross price elasticity of 0.5. B) complements, with a cross price elasticity of -0.5. C) substitutes, with a cross price elasticity of -2.0. D) complements, with a cross price elasticity of -2.0.
The shortened work week coupled with rising hourly wages in the U.S. economy shows that
A. the income effect has been dominant. B. the substitution effect does not exist at all. C. the U.S. worker is no longer productive. D. workers have become increasingly lazy.