Free markets, by definition, must always be efficient.
Answer the following statement true (T) or false (F)
False
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If the government imposes a tax on a competitive market with no externalities, then i. resource use is not efficient. ii. there is a deadweight loss. iii. consumer surplus is at its maximum
A) ii only B) i and ii C) iii only D) i and iii E) i, ii, and iii
A bank has checkable deposits of $1,000,000, loans of $600,000, and government securities of $400,000. If the required reserve ratio is 5 percent, the amount of required reserves is
A) $100,000. B) $30,000. C) $50,000. D) $80,000. E) $20,000.
When comparing elasticities between two different linear demand curves, the curve that is flatter has greater price elasticity at every given price
Indicate whether the statement is true or false
When the price of a good changes, the substitution effect occurs because:
a. the consumers' real income measured in terms of that good changes. b. the relative price of that good changes compared to other goods in the consumption bundle. c. the total utility of that good decreases. d. the marginal utility of that good decreases. e. consumers have an incentive to substitute irrational behavior for rational behavior.