Suppose new research shows that soy milk and other products derived from soybeans provide more health benefits than previously thought. At the same time, drought conditions result in extensive damage to the soybean crop. What will be the combined impact
of these two factors on the equilibrium price and quantity of soybeans?
A) Price will decrease, but the effect on quantity is indeterminate.
B) Price will increase, but the effect on quantity is indeterminate.
C) Quantity will decrease, but the effect on price is indeterminate.
D) Quantity will increase, but the effect on price is indeterminate.
Answer: B
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A recession shows
A) supply always equals demand. B) supply never equals demand. C) thousands of businesspeople have misread market signals. D) real GDP must be lower than nominal GDP. E) not enough households are using their credit cards.
All of the following contributed to the downfall of the Soviet Union in 1991 except
A) lack of high-quality goods and services. B) public dissatisfaction with low living standards and political repression. C) an inability to produce low-cost consumer goods that households wanted. D) lack of a strong dictator who could coordinate economic activities.
The public-choice view states that
a. all governments are bad and should be abolished. b. macroeconomic policymakers are only interested in the social good. c. policymakers in the public sector work for the public, whereas policymakers in the private sector have private interests. d. macroeconomic policymakers act to maximize their own welfare rather than acting for the social good. e. both c and d.
Consider a market that is in equilibrium. If it experiences both a decrease in demand and a decrease in supply, what can be said of the new equilibrium? The equilibrium:
A. price and quantity will both fall. B. quantity will definitely fall, while the equilibrium price cannot be predicted. C. price will definitely fall, while the equilibrium quantity cannot be predicted. D. price and quantity will both rise.