Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. If no price controls had been in
place, the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been
A) an increase in both price and quantity.
B) an increase in price and a decrease in quantity.
C) a decrease in price and an increase in quantity.
D) a decrease in both price and quantity.
B
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Suppose the following information describes the economy:Household saving300Business saving700Government purchases1,000Government transfers and interest payments500Government tax collections1,500GDP5,000Public saving equals ____and national saving equals ________.
A. 1,000; 2,000 B. 0;0 C. 0; 1000 D. 0; 300
Oligopolists may charge a price lower than the profit maximizing price to discourage new firms from entering a market
a. True b. False Indicate whether the statement is true or false
No society can provide its citizens with everything that they want because of
a. greedy politicians b. lazy workers c. an educational system that does not provide hands on experience d. firms that strive to maximize profits e. a scarcity of resources
When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent
a. a loss in total welfare. b. a transfer of benefits from the buyer to the seller. c. the higher marginal costs incurred by the monopolists in comparison to competitive firms. d. All of the above are correct.