Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5). If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7), which of the following is true?
A. Consumer surplus increases by $9.
B. Consumer surplus decreases by $5.
C. Consumer surplus increases by $5.
D. Consumer surplus decreases by $9.
Answer: A
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Use the following supply and demand graph to answer the question below.
In the graph, line S is the current supply of this product, while line S1 is the optimal supply from the society's perspective. If government corrects this externality problem and shifts production to the socially optimal level, then the product price will be equal to
A. 0G. B. 0D. C. 0F. D. 0E.
The popular diet drug Redux was removed from the market in August 1997, after a Mayo Clinic report linked the drug to heart valve damage. a . Explain the effect of this action on membership at Gold's Gym, on enrollment at diet centers such as Weight
Watchers, where clients learn to lose weight by exercising and eating right, and on sales of treadmills and exercise bikes. b. Would you expect people to switch to other diet drugs now that Redux has been banned? How would you explain the fact that sales of the most popular, and still legal, diet drug phentermine have plummeted since the Mayo clinic report was released?
Which of the following would help control the future growth of healthcare prices and expenditures?
a. an increase in the share of healthcare costs paid for either directly or from personal medical savings accounts b. the substitution of catastrophic (high deductibility) health insurance for low co-payment plans c. more reliance on expansion in the supply of medical services rather than stimulation of demand d. all of the above
Suppose the interest rate is 5 percent. Consider three payment options: 1 . $500 today. 2 . $520 one year from today. 3 . $550 two years from today. Which of the following is correct?
a. 1 has the lowest present value and 3 has the highest. b. 2 has the lowest present value and 1 has the highest. c. 3 has the lowest present value and 2 has the highest. d. None of the above is correct.