Suppose you drive a car that gets good gas mileage, and you notice that more and more people are driving gas-guzzling cars. Their increased demand for gas:
A. does not change the price you pay, but it reduces the quantity of gas supplied.
B. does not affect you.
C. is likely to cause the price you pay for gas to increase.
D. is likely to cause the price you pay for gas to decrease.
Answer: C
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Which of the following market structures is characterized by a single firm and huge barriers to entry?
a. Monopolistic competition b. Oligopoly c. Monopoly d. Monopsony e. Perfect competition
Which of the following would tend to increase the value of a future stream of income?
a. an increase in the rate of inflation b. an increase in the interest rate c. a reduction in the interest rate d. a reduction in the size of the expected future income
If there are two airlines selling service between city A and city B, the best model to analyze this market is
A. perfect competition. B. monopolistic competition. C. oligopoly. D. monopoly.
Which factor does not affect the elasticity of demand for a good?
(A) The importance of the good to the consumer. (B) The availability of substitute goods. (C) The consumer's perception of the good as necessity or luxury. (D) An increase in population.