Answer the following questions true (T) or false (F)
1. The producer's supply response under a cobweb adjustment response is based on the previous period price.
2. When firms cannot alter the price they face in the market, they are said to be price takers.
3. An outward shift in the demand curve in a perfectly competitive market will result in an increase in supply and make the demand curve more inelastic.
1. TRUE
2. TRUE
3. FALSE
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Rent controls and controls on other prices often aggravate the very problem they are intended to solve.
Answer the following statement true (T) or false (F)
Consider the market for consumer loans. A legal ceiling set below the market-clearing interest rate would tend to
A) increase the quantity demanded for loans. B) decrease the quantity supplied of loans. C) create a shortage of loans. D) do all of the above. E) do none of the above.
Refer to Table 7-6. Prior to trade, what was the opportunity cost to produce 1 sword in Estonia?
A) 1/3 of a belt B) 3/5 of a belt C) 1.67 belts D) 3 belts
An individual's permanent income is
A) constant over time. B) the same as his current income. C) unaffected by tax changes. D) equal to his expected average income.