If a price ceiling is set above the equilibrium price,
A. there will be a shortage.
B. there will be a surplus.
C. demand will be less than supply.
D. quantity demanded will equal quantity supplied.
Answer: D
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Daniel notices that every year with a mild winter, his roses begin to bloom in February, but every year with a severe winter, his roses do not begin to bloom until April. He concludes that the severity of the winter is responsible for the month in which his roses begin to bloom. Daniel is
A. very probably correct in his conclusion that the severity of the winter is a cause of when his roses begin to bloom. B. probably misguided in that there is no apparent correlation or causation in this situation. C. definitely confusing correlation with causation. D. likely correct that there is causation, but the causation is more likely running in the opposite direction in that the initial blooming of his roses is the cause of the severity of the previous winter.
The relative price of a smartphone is
A. the price of the smartphone compared with what students think it should cost. B. what the company earned for selling the smartphone. C. the money price of the smartphone divided by the money price of some other good. D. the amount it cost to make the smartphone.
Suppose there is an unusually large crop of apples this year. How might this affect the market for apples?
A. The demand would increase, increasing both equilibrium price and quantity. B. The supply would increase, decreasing equilibrium price and increasing equilibrium quantity. C. The supply would decrease, increasing equilibrium price and decreasing equilibrium quantity. D. The demand would decrease, decreasing both equilibrium price and quantity.
If a local government collects taxes of $250,000, has $175,000 of government consumption expenditures, makes transfer payments of $75,000, and has no interest payments or investment, its budget would
A) show a surplus of $100,000. B) show a surplus of $75,000. C) be in balance with neither a surplus nor a deficit. D) show a deficit of $75,000.