Give an example of a price floor. Draw a corresponding diagram and explain why there is a continuing surplus.
What will be an ideal response?
The example used in the text is price supports for agriculture, such as milk. A diagram should look like Figure 4-12 in the text. Quantity supplied exceeds quantity demanded, but price is not allowed to fall. Therefore, there is an ongoing market surplus.
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Given the budget line in the above figure, what is the household's real income in terms of pizzas per month?
A) 5 pizzas per month B) 4 pizzas per month C) 3 pizzas per month D) All of above represent the household's real income.
. The mid-point method of calculating elasticity is typically used because:
A. it is easier to calculate. B. it is universally understood by all economists. C. the negative sign can then be ignored. D. it is a consistent way to estimate the elasticity of demand between two points on a demand curve, regardless of the direction of the movement.
Financial investments, such as mutual fund purchases, are included in the national income component
a. True b. False Indicate whether the statement is true or false
Voice-Beat is an earphone manufacturing firm. Suppose 900 units of earphones are demanded when the price of each unit is equal to $40 . When the price is $42 per unit, 837 units of earphones are demanded. On the basis of the given data, we can say that the price elasticity of demand of Voice-Beat earphones is: a. inelastic
b. elastic. c. perfectly inelastic. d. perfectly elastic.