In competitive markets, surpluses or shortages will
A. cause changes in the quantities demanded and supplied that tend to eliminate the excess production or excess demand.
B. cause shifts in the demand and supply curves that tend to eliminate the excess production or excess demand.
C. cause changes in the quantities demanded and supplied that tend to intensify the excess production or excess demand.
D. never exist because the markets are always at equilibrium.
Answer: A
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The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then
A) the demand for long-distance phone calls is price inelastic. B) the total revenue from long-distance phone calls will increase if they lower the price. C) the demand for long-distance phone calls is income elastic. D) the total revenue from long-distance phone calls will decrease if they lower the price.
Corporations, like individuals, face an alternative minimum tax (AMT).
A. True B. False C. Uncertain
Since 1950, recessions in the United States
A) have become less severe than before 1950. B) have become more severe than before 1950. C) are about as severe as they were before 1950. D) have not occurred.
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. Which of the following best represents Kate's inverse residual demand function?
A. P(QK) = (100 - 0.005QA) - 0.005QK B. P(QK) = (100 - 0.005QK) - 0.005QA C. P(QK) = (200 - 0.005QA) - 0.005QK D. P(QK) = (200 - 0.005QA) - 0.005QA