Relative price changes are a desirable and essential ingredient of the market mechanism.
Answer the following statement true (T) or false (F)
True
Relative prices change when there is a change in relative scarcity.
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As the housing bubble began to burst in 2006-2008, investors would only buy mortgage-backed securities at high yields to compensate for higher perceived default risk. As a result::
A) banks suffered significant capital losses as the value of their holdings of mortgage-backed securities declined B) funds available for mortgages increased C) bank profits rose as they earned higher interest on mortgages D) the price of mortgage-backed securities tended to rise due to the higher yields
Refer to Figure 9.5. If the government establishes a price floor of $2.50, how many pounds of berries will be sold?
A) 200 B) 300 C) 400 D) 600 E) 800
Show, or explain, why a monopolist with positive marginal costs charges a price on the elastic range of his/her demand curve
Which of the following is an example of a normative, as opposed to positive, statement?
a. Following the most recent recession, the economy is recovering at a slower than usual pace. b. To stimulate the economy during the most recent recession, the federal government increased spending. c. In response to the most recent recession, the federal government extended the duration of unemployment benefits. d. The federal government's responses to the most recent recession were insufficient.