We observe evidence of a shortage when we see
A) the quantity purchased is greater than the quantity supplied.
B) the quantity purchased is less than the quantity supplied.
C) nonmonetary costs of acquisition have risen.
D) goods have becomes more scarce.
E) prices have increased suddenly and substantially.
C
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If a bank has $6 billion in reserves and loans $2 billion to another bank, then the total quantity of reserves demanded is:
A) $6 billion. B) $8 billion. C) $2 billion. D) $4 billion.
A friend says, "I really, really need a new car." As an economist, you're thinking
A) Right! Everyone needs a new car. B) This is an example of how objectively undefinable needs are. Many would argue that this friend could get along just fine with a reliable used car. C) If this friend says she needs a new car, then we must all agree that a new car is a need and not just a want. D) that a new car can only be considered a need if at least 51% of the public agrees.
Economists find that models based on the assumption of rational behavior are robust, because a world in which everyone is rational would function quite similarly to a world in which there are no
a. unexploited profit opportunities. b. constraints due to scarcity. c. inefficient markets. d. barriers to free trade.
Predatory pricing occurs when a firm
a. exercises its oligopoly power by raising its price through the formation of a cartel. b. exercises its monopoly power by raising its price. c. cuts its prices in order make itself more competitive. d. cuts its prices temporarily in order to drive out any competition.