Suppose the government imposes a price ceiling above the equilibrium price of a given good. Which of the following is the most likely result?
A) Some other rationing device will emerge to allocate the good among buyers.
B) Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling.
C) No change will occur in the market.
D) Brute force will be used to allocate the good among buyers.
E) a, b, and d
C
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Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?
A) $2.00 B) $2.25 C) $2.50 D) $3.00
Adam Smith's theory of the invisible hand posits that the most efficient allocation of resources is often achieved by:
A. collective action. B. reducing economic inequality. C. government intervention in the market. D. the actions of independent, self-interested buyers and sellers.
Suppose an insurance company determines that the average annual malpractice cost is $10,000 for reckless lawyers and $500 for careful lawyers. If 10% of the lawyers insured by the company are reckless, the company will earn zero economic profit if the price of insurance is:
A. $500. B. $1,450. C. $5,250. D. $10,000.
Services can be thought of as
A) unvalued goods. B) unwanted goods. C) free goods. D) intangible goods.