If a good has become more scarce, then we know for sure that
a. the demand for it increased.
b. the supply of it decreased.
c. either the demand for it increased or the supply of it decreased.
d. both the supply of it and the demand for it decreased.
c
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Accounting profits are typically
A) greater than economic profits because accounting profits do not include explicit costs. B) greater than economic profits because accounting profits do not include implicit costs. C) smaller than economic profits because accounting profits do not include explicit costs. D) equal to economic profits in the long run.
California passed a law called "Proposition 2 1/2" that limited property taxes to 2.5 percent of property value. Naturally this reduced taxes on many properties, and apartment landlords had more money at the end of the year at given rents. This windfall could be called an economic rent only if
a. we push the definition of economic rent too far. b. the supply of rental units can be expanded. c. the supply of rental units is fixed. d. competitors can build housing at costs that yield the return that was earned before the tax cut.
For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. There are many close substitutes for this good. b. The good is a luxury. c. The market for the good is broadly defined. d. The relevant time horizon is long.
If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about
a. 0.2%. b. 0.5%. c. 2.0%. d. 4.5%.