Assume that there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation?
A) The supply of hybrid automobiles is greater than the demand for hybrid automobiles.
B) Some consumers will be unable to obtain hybrid automobiles at the market price and will have an incentive to offer to buy the product at a higher price.
C) The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease.
D) The surplus will cause an increase in the equilibrium price of hybrid automobiles.
Answer: C
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When the government increases the level of official reserves by $50 million, the change is recorded in the
A) capital and financial account. B) current account. C) official settlements account. D) official reserves account. E) foreign currency account.
Which of the following is correct? Inflation
a. impedes financial markets in their role of allocating resources. b. reduces the purchasing power of the average consumer. c. generally increases after-tax real interest rates. d. is most costly when anticipated.
The elasticity of labor supply measures the
A. Magnitude of the substitution effect of labor. B. Responsiveness of the wage rate to changes in the labor supplied. C. Responsiveness of labor supplied to changes in the wage rate. D. Opportunity cost of labor.
The preceding table gives monthly production information for Peter's Peanuts, a firm in a perfectly competitive industry. Initially the market price of peanuts is $2.00 per pound
If the market price of peanuts fall to $1 per pound and a worker costs $800 per month, how many workers will Peter employ to maximize his profit? A) zero B) two C) three D) four