If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:
a. rise and the equilibrium quantity to fall.
b. rise and the equilibrium quantity to stay the same.
c. rise and the equilibrium quantity to rise.
d. stay the same and the equilibrium quantity to fall.
b. rise and the equilibrium quantity to stay the same.
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to rise and the equilibrium quantity to stay the same.
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One important difference between the political process and the market process is that
A) the political process results in collective actions that maximize economic surplus, while the market process may lead to efficiency losses. B) the political process results in collective actions in which everyone is made better off, while the market process results in actions that favor some groups only. C) the political process results in collective actions in which not everyone is required to participate, while in the market process individuals are obliged to participate. D) the political process results in collective actions in which everyone is obliged to participate, while in the market process individuals are free to participate or not.
The spread between interest rates on low quality corporate bonds and U.S. government bonds
A) widened significantly during the Great Depression. B) narrowed significantly during the Great Depression. C) narrowed moderately during the Great Depression. D) did not change during the Great Depression.
International reserves are
A) assets denominated in a foreign currency and used in international transactions. B) reserves the Fed requires banks to hold against Eurodollar deposits. C) reserves the International Monetary Fund requires banks to hold if they wish to participate in the market for foreign exchange. D) central bank holdings of gold.
A good that has qualities that are easy for a consumer to assess in advance of a purchase is called
A. a credence good. B. a persuasive good. C. an experience good. D. a search good.