Which of the following statements about the consumers' responses to rising gasoline prices is correct?
a. About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
b. About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
c. About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
d. Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.
c
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If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then it will produce
A) 2 million units. B) 3 million units. C) 4 million units. D) 5 million units.
When the government is the sole depository of foreign currencies and exercises complete control over how these currencies may be used, this
a. is a violation of International Monetary Fund regulations for member countries because it denies the right of market forces to determine exchange rates b. creates equilibrium in the foreign exchange market which would otherwise not occur c. is an example of exchange controls that allow a government to maintain a fixed exchange rate d. is necessary in a floating exchange rate system to keep the market in equilibrium e. stimulates international trade because it eliminates all the uncertainty associated with floating exchange rates
The effective tax rate refers to the actual taxes paid as a percentage of taxable income.
Answer the following statement true (T) or false (F)
Most of our daily economic activity takes place in which type of market?
A. monopoly B. oligopoly C. imperfect competition D. perfect competition E. public good