The market for chewing gum is competitive with a current price of 50 cents per pack and quantity of 100,000 packs. Which of the following events would lead to a new equilibrium price of 40 cents and quantity of 80,000 packs?
a. an increase in the price of other kinds of candy
b. an increase in the price of the ingredients used to make chewing gum
c. a decrease in the number of young people in the population
d. an agreement by workers in the chewing gum industry to work for lower wages
e. an improvement in chewing gum production technology
C
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One problem with using monetary policy to address "bubbles" in asset markets is that:
A. monetary policy is well-suited for addressing the problem of inappropriately high asset prices. B. reducing the real interest rate to deal with the bubble could lead to inflation. C. the Federal Reserve is not interested in stabilizing output. D. doing so presupposes that the Federal Reserve is better than financial-market professionals at identifying bubbles.
Purchases and sales of government securities by the Federal Reserve are called
A) discount loans. B) federal fund transfers. C) open market operations. D) swap transactions.
Equity and efficiency _____. Thus, _____
a. are always consistent with each other; trade-offs between the two are necessary b. are never consistent with each other; trade-offs between the two are unnecessary c. might be consistent in certain situations; trade-offs between the two might be necessary d. might be consistent in certain situations, trade-offs between cannot be made
As more producers with differing marginal rates of transformation are added, the joint production possibility curve becomes
A) steeper. B) flatter. C) more convex to the origin. D) smoother.