According to the law of one price,
a. there exists only one price that will clear a competitive market.
b. the long-run price of a commodity will equal the marginal cost of production.
c. identical goods will sell for identical prices.
d. the price of a good must equal the value of the labor used to produce it.
c. identical goods will sell for identical prices.
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Suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price floor of $5 per gallon of milk, the
A) quantity supplied of milk falls short of the quantity demanded. B) quantity supplied of milk exceeds the quantity demanded. C) supply increases. D) demand decreases. E) price of milk remains $4 per gallon.
Which of the following would be most likely to increase your opportunity cost of attending college?
a. a recession in the economy that made finding a job more difficult b. receiving a very attractive offer to start a job today that would permit you to earn about 50 percent more than you expected to make after graduation c. the retirement of your favorite professor under whom you hoped to study during the next semester d. information indicating that salaries were declining and that there were very few openings for college graduates in your field
The substitution effect shows that when the wage rate increases
a. an additional hour of labor is not worth pursuing. b. an additional hour of leisure is now less costly in terms of foregone consumption. c. an additional hour of leisure is now more expensive in terms of foregone consumption. d. there will be intertemporal substitution.
In Graph A, if the price of Coca-Cola changes from Point A to Point B, what type of change will happen in Graph B?
a. a shift down
b. a shift up
c. a shift to the right
d. a shift to the left