If producers incorrectly set the price of their product too high:
A. a shortage will result.
B. a surplus will result.
C. equilibrium will result.
D. the industry will die out soon.
B. a surplus will result.
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In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country
a. abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. b. abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. c. abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. d. abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.
Suppose the market-equilibrium quantity of good x is larger than the socially-optimal quantity of good x. Does the production of good x convey a positive externality or does it convey a negative externality?
If price is above the equilibrium price, then there will be:
A. excess demand. B. both excess supply and excess demand. C. excess supply. D. neither excess supply nor excess demand.
Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,:
A. provides a real, rather than a nominal, rate of inflation. B. gives a better measure of ongoing, sustained price changes. C. is more consistent with measures of inflation used in other countries. D. fluctuates more than measures of inflation that include food and energy prices.