Ceteris paribus, a decrease in the price of a good will cause the
a. quantity demanded of the good to decrease.
b. quantity supplied of the good to increase.
c. producer surplus derived from the good to decrease.
d. supply of the good to decrease.
C
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Consumer surplus exists when
A) it costs less to produce goods than buyers must pay for them. B) consumers value the good more highly than what they must pay to buy it. C) taxes on goods are less than the appropriate amount. D) the marginal benefit of the good is always equal to or less than the price of the good. E) the price of the good is greater than the marginal cost of producing a unit of the good.
Depository institutions
A) make profit from the spread between the interest rate they pay on deposits and the interest rate they receive on loans. B) make a profit according to how much the Federal Reserve pays them. C) make their profit by charging the government for their services. D) make zero profit but receive compensation by the government because their services are so valuable.
A price floor will be binding only if it is set
A. equal to the equilibrium price. B. either above or below the equilibrium price. C. above the equilibrium price D. below the equilibrium price
Which of the following most accurately states the economic significance of voluntary exchange?
a. Goods and services have value because they exist; exchange causes some people to win while others lose. b. Exchange creates value because it makes it possible for the trading partners to expand total output as the result of specialization and division of labor. c. Exchange moves goods and services from people who value them more to parties who value the goods less. d. Exchange cannot create additional value because it does not create additional goods and services.