If goods X and Y are complements, the
A. quantities demanded of X and Y tend to move in opposite directions.
B. quantities demanded of X and Y tend to move in the same direction.
C. prices of X and Y tend to move in the same direction.
D. supply curves for X and Y tend to move in the same direction.
Answer: B
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What would be the impact if the government forced the breakup of a natural monopoly to promote greater competition in an industry? a. Smaller firms would have a cost advantage over larger firms. b. The price paid by consumers would be unchanged
c. The average cost of producing the good would increase. d. The average cost of producing the good would decrease.
The use of government spending and taxation for the purpose of stabilizing the economy is called
A. budget policy. B. monetary policy. C. fiscal policy. D. trade policy.
Anna was willing to pay $130,000 for Betty’s house, which was listed at $125,000, but Anna could only afford to spend $120,000. After negotiating, Betty sold Anna the house for $120,000. How does consumer surplus apply to this situation?
a. The consumer surplus is indeterminable because we do not know how much Betty paid for the house. b. The consumer surplus is $5,000 because Anna got Betty to lower her price by that amount. c. The consumer surplus is $10,000 because Anna was willing to pay that much more than she did. d. There is no consumer surplus because Anna did not pay less than she was willing and able to pay.
The current price per share of the XYZ company, which is traded on the New York Stock Exchange, is $100. At that price, the total quantity of shares demanded is 1,000 and the total quantity supplied for trade is 1,500. It follows that
a. $100 is the equilibrium price per share. b. there will be downward pressure on the price of shares of the XYZ company. c. there will be upward pressure on the price of shares of the XYZ company. d. there is a shortage of shares of the XYZ company on the stock exchange.