Rationing schemes are often used during times of war because
a. the market will not come to equilibrium
b. military forces cannot afford war supplies
c. high prices erode popular support for the war effort
d. it is a windfall gain to the typical consumer
e. short lines are better than short pocket books
C
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If the consumption function is given by C = 100 + .6(Y-T) and planned investment is 150, government spending is 50, and T is 100, then equilibrium income is
a. 600 b. 750 c. 400 d. 350
In a purely competitive market, the Herfindahl Index would have a value approaching
a. 1. b. 100. c. 0. d. infinity.
Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?
a. People respond to incentives. b. Rational people think at the margin. c. Trade can make everyone better off. d. Markets are usually a good way to organize economic activity.
Two products are substitutes if:
A. an increase in the price of one causes buyers to demand less of the other. B. an increase in the price of one causes buyers to demand more of the other. C. a decrease in the price of one causes buyers to demand more of the other. D. individuals consume the goods together.