An increase in the interest rate __________ purchases of consumer __________
A) increases; durables
B) increases; nondurables
C) reduces; durables
D) reduces; nondurables
C
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Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
A) The demand for wheat would decrease and the equilibrium price of wheat would decrease. B) The supply of wheat would increase and the equilibrium price of wheat would decrease. C) The demand for wheat would increase because consumers could afford to buy more wheat and corn. D) The demand for wheat would decrease and the equilibrium price of wheat would increase.
In the short run, if a firm operates, it earns a profit of $500. The fixed costs of the firm are $100. This firm has a producer surplus of
A) $500. B) $100. C) $400. D) $600.
A sudden rise in the market demand in a competitive industry leads to
a. A short run market equilibrium price higher than the original equilibrium b. A market equilibrium higher than the short run price c. Some firms exiting the market d. All of the above
Less skillful drivers are more likely to buy auto insurance with lower deductibles. Economists use this as an example of:
A. information optimization. B. adverse selection. C. asymmetric selection. D. moral hazard.