In imperfectly competitive markets, increasing production will decrease the price of all units sold. This concept is known as the
a. income effect.
b. cost effect.
c. output effect.
d. price effect.
d
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Adverse selection:
A. occurs when buyers and sellers have different information about the riskiness of a situation. B. can result in failure to complete transactions that would have been possible if both sides had the same information. C. refers to the tendency for people with higher risk to be drawn toward insurance. D. All of these statements are true.
Keynesians believe a change in the money supply cannot lower the unemployment rate.
a. true b. false
If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
A. raise prices 1 percent. B. lower prices 1 percent. C. raise prices until the elasticity becomes very high. D. keep the price where it is.
More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?
A. The demand curve will shift to the left. B. absolutely no change in either the quantity demand or the demand for beef C. As consumer preferences move away from beef, there is an upward movement along the beef demand curve. D. The demand curve does not shift but consumers move to a point lower down the curve.