If the price of an item can freely adjust, a market will
A) always move towards equilibrium.
B) always have an excess quantity demanded.
C) always have an excess quantity supplied.
D) never move towards equilibrium because prices are always increasing.
A
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If a firm decreases production, then its:
A. variable costs rise. B. fixed costs stay the same. C. total costs increase. D. All of these are true.
Voluntary exchanges generate:
A. surplus, leaving both participants better off than they were before. B. deadweight loss, leaving both participants worse off than they were before. C. deadweight loss, leaving at least one participant worse off than they were before. D. a transfer of surplus from one participant to another.
Because market price always tends back to the minimum average total cost for all identical firms in a perfectly competitive market in the long run, in theory:
A. price will be the same at any quantity. B. the supply curve may be downward sloping. C. the supply will remain a constant quantity. D. the supply curve will be upward sloping.
Which of the following is most likely to be a variable cost?
A. Rental payments on office equipment B. Interest on business loans C. Fuel and power payments D. Real estate taxes