What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
c
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Robert applied for health insurance but did not mention in the application form that his family has a history of heart ailments that are considered to be hereditary. What will happen if several customers like Robert purchase the insurance?
What will be an ideal response?
Jack swapped his basketball for Jim's glove. Even if national income accountants were aware of this trade, they wouldn't include it in their GDP measure because
A) it was an unproductive exchange. B) the basketball and glove were not final goods. C) this was not a market transaction. D) it failed to increase the wealth of both traders. E) there is no satisfactory way to determine market values for bartered goods, new or used.
After massive promotion of Justin Bieber's latest music album, the producers reacted by raising prices for his albums. This implies that promotion expenditures made the album demand
a. Elastic b. Unitary elastic c. Vertical d. Inelastic
When investors follow a "herd instinct," they make decisions:
A. based on hearsay, not objective information. B. based on emotion, not objective information. C. as a group, inflating the prices of goods somewhat arbitrarily. D. based on the sound logic of a group, rather than the individual.