Economic analysis is a tool that
A. makes everyone rich.
B. aids decision making.
C. helps us forgive selfish people.
D. helps us understand why people make mistakes.
Answer: B
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Which of the following statements is true of a frictionless labor market?
A) The quantity of labor demanded always exceeds the quantity of labor supplied. B) Firms can instantly hire and fire workers. C) The quantity of labor supplied always exceeds the quantity of labor demanded. D) All firms pay below the equilibrium wage rate.
Suppose the U.S. economy enters a recession and incomes fall. What will happen to the equilibrium prices and quantities of normal goods? Would your answer be the same if you were discussing inferior goods? Why or why not?
What will be an ideal response?
When a shortage occurs in the market for a good, quantity
A. demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. B. supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. C. demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. D. supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.
There was an extensive black market (illegal market) for many consumer products in the United States during World War II. A likely explanation of the black market is that:
a. the prices of goods were artificially held down by price controls. b. black markets were legal during the war. c. goods were not subject to price controls. d. gasoline rationing greatly restricted civilians from driving to stores.