If the price of a product increases
A. there is an increase in quantity supplied and a decrease in demand.
B. there is an increase in quantity supplied and a decrease in quantity demanded.
C. there is an increase in supply and a decrease in quantity demanded.
D. there is an increase in supply and a decrease in demand.
Answer: B
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The big tradeoff between equality and efficiency exists because
A) redistribution uses resources and weakens incentives to work. B) redistribution uses resources and strengthens incentives to work. C) redistribution creates additional resources and weakens incentives to work. D) redistribution creates additional resources and strengthens incentives to work.
A positive externality exists and government wants to impose a subsidy in order to bring about an efficient outcome. To accomplish its objective, government must set the subsidy equal to marginal
A. private cost. B. social benefit. C. external cost. D. social cost. E. external benefit.
Assume that a firm's marginal revenue curve intersects the rising portion of the marginal cost curve at 100 units of output. At this output level, a profit-maximizing firm's total cost is $1,000 . If the price of the product is $3 per unit and the firm produces at the profit-maximizing level, the firm will earn an economic profit equal to:
a. -$1,000. b. -$700. c. -$400. d. -$600. e. $200.
The fallacy of composition is:
a. the erroneous view that an economic activity can sometimes exceed the sum of its components b. the erroneous view that what is true for the individual will also be true for the group. c. the view that the aggregation of economic activity will necessarily lead to an outcome that is different than the outcome generated by each individual in the group. d. the idea that association need not imply causation.