Suppose the equilibrium price and quantity of ketchup fall. The most likely explanation for these changes is:
A. an increase in the demand for ketchup.
B. a decrease in the supply of ketchup.
C. a decrease in the demand for ketchup.
D. an increase in the supply of ketchup.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Which of the following is a discretionary fiscal policy action?
A) a progressive tax system that leads to an increase in income tax revenues during an economic boom B) a deliberate tax cut when the economy experiences high unemployment C) an increase in the amount of unemployment compensation because more people become unemployed D) an increase in Supplemental Security Income payments when more people become eligible for the benefits
The above figure represents the demand and marginal revenue curves for Sue's Seafood, a seller of fresh fish
a. Over what range of output is demand elastic? b. Over what range of output is demand inelastic? c. What price maximizes total revenue? d. What is the price elasticity of demand at the revenue maximizing price?
Compared to the free-market outcome, if the production of wheat were subsidized by the government,
A) the supply of wheat would increase. B) the quantity supplied of wheat would increase. C) the quantity demanded of wheat would increase. D) all of the above would occur. E) none of the above would occur.