An extraordinarily small crop of farm products due to drought causes:
A. a large increase in the price of farm products because the demand for farm products is
price inelastic.
B. only a slight increase in the price of farm products because the demand for farm products
is income elastic.
C. only a slight increase in the price of farm products because the demand for farm products
is income inelastic.
D. a large increase in the price of farm products because the demand for farm products is
price elastic.
Answer: A
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The difference between the ________ and the ________ from the sale of a product is called producer surplus
A) highest price a firm would have been willing to accept; lowest price it was willing to accept B) cost to produce a product; profit received C) lowest price a firm would have been willing to accept; price it actually receives D) cost to produce a product; price a firm actually receives
Deflation exists whenever: a. the overall price level falls
b. the overall price level rises. c. the economy experiences a contraction. d. the price of a good decreases.
An example of a case in which free markets do not align self-interest with social interest is pollution-emitting production:
Indicate whether the statement is true or false
The most complete definition of an economic system includes
(a) incentives, opportunity costs and markets. (b) resource allocation arrangements, property rights and incentives. (c) property rights and scarcity. (d) the laws of supply and demand, the principle of substitution and self-interest. (e) choice and the law of diminishing returns.