We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when
A. supply and demand for a product simultaneously decrease.
B. supply decreases and demand increases.
C. supply increases and demand decreases
D. supply and demand for a product simultaneously increase.
Answer: A
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The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of sandwiches, which for consumers are substitutes for pizza?
A) Figure A B) Figure B C) Figure C D) Figure D
Which of the following is a possible government solution to the problem posed by a good with an external benefit?
A) Give a voucher to buyers of the good. B) Tax the consumption of the good. C) Tax the production of the good. D) All of the above are possible solutions.
Suppose a firm notices that the price it faces has doubled, but it does not change its level of output. It must be the case that
a. profits have doubled b. the marginal cost curve is falling c. total revenue has decreased d. the original price was less than half of the minimum of the AVC curve e. this situation would not really occur
Gertie saw a pair of jeans that she was willing to buy for $35. The price tag, though, said they were $29.99. Therefore:
A. Gertie should buy the jeans because the price is more than her reservation price. B. Gertie should not buy the jeans because they will be of lower quality than she expected. C. Gertie should buy the jeans because the price is less than her reservation price. D. Gertie should not buy the jeans because the price is not equal to her reservation price.