An increase in the required reserve ratio by the Federal Reserve would:
a. cause M1 to contract.
b. cause M1 to expand.
c. have no effect on M1 or M2.
d. affect only M2, not M1.
Ans: a. cause M1 to contract.
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OPEC is an example of a:
A. cartel. B. duopoly. C. monopoly. D. monopsony.
There are five hundred buyers in the market for cheese. If we know each individual's demand curves, to find the market demand, we must
A) multiply the price times quantity for each buyer and then add the resulting products together. B) add the quantities that each buyer will purchase at every price. C) add the prices that each buyer will pay at every quantity. D) average the price each buyer is willing to pay for each given quantity. E) give up because there is no way to find the market demand.
________ is the difference between the willingness to pay and the price paid for a good
A) Producer surplus B) Consumer surplus C) Seller's profit D) Revenue
Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. At the market equilibrium, if demand is more elastic than supply in absolute value, a $1 specific tax will
A) raise the price to consumers by 50 cents. B) raise the price to consumers by less than 50 cents. C) raise the price to consumers by more than 50 cents. D) raise the price to consumers by $1.