A shortage will occur when
A) the price equals the market clearing level.
B) the price is above the market clearing level.
C) there is an excess quantity supplied.
D) the price is below the market clearing level.
Answer: D
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It is difficult for a private market to provide the economically efficient quantity of a public good because
A) by law governments cannot use cost-benefit analysis to determine this quantity. B) it is too expensive to produce the necessary amount of the good. C) individual preferences are not revealed in the market for the good. D) public goods produce positive and negative externalities.
Which of the following is inconsistent with the others?
a. Y - C - G > I b. this country had a trade surplus c. the purchase of foreign assets by this country's residents exceed foreigner's purchases of this country's assets d. this country's investment exceeded its domestic saving
Cost-of-living adjustments are:
A. automatic wage changes based on the CPI which are included in some union contracts. B. changes in the basket of goods used in calculating the CPI. C. averages of neighboring years' base prices used in constructing the CPI. D. quality measurements included in the calculation of the CPI.
Demand is inelastic if
A. the percentage change in quantity demanded is greater than the percentage change in price. B. the elasticity of demand is less than 1. C. the demand for the good is sensitive to changes in price. D. more units will be purchased if the price increases.