Suppose that the percentage change in demand is 20%, the price elasticity of demand is 3, and the percentage change in the equilibrium price is 4%. What is the price elasticity of supply?
A. 0
B. 2
C. 4
D. 5
Answer: B
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A market in which there are many sellers who all sell an identical product is called
A) perfect competition. B) monopolistic competition. C) monopoly. D) oligopoly.
In the simple deposit expansion model, if the Fed extends a $100 discount loan to a bank that previously had no excess reserves, the bank can now increase its loans by
A) $10. B) $100. C) $100 times the reciprocal of the required reserve ratio. D) $100 times the required reserve ratio.
As a result of the superb economics essay that you wrote during this quarter, you won the Adam Smith prize of $100. The receipt of these funds would be an example of
A) the substitution effect being stronger than the income effect. B) the income effect being stronger than the substitution effect. C) a pure income effect. D) a pure substitution effect.
In a market where the equilibrium price is $7, any price lower than $7 would cause
a. a balanced demand and supply b. an excess supply c. an excess demand d. none of the above