If government imposes a price ceiling on a good that is below the market equilibrium price
A) a surplus will develop.
B) a shortage will develop.
C) producers will reduce their sales price.
D) consumers will reduce their demand for the good.
B
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A lumpy input is one that
a. is infinitely divisible b. is not smooth c. can only be adjusted in large amounts d. can not be legally employed e. can be easily adjusted in small amounts
One of the arguments supporting new classical theory is the policy ineffectiveness proposition (PIP)
Indicate whether the statement is true or false
Adverse selection will occur in a market as a result of
A) asymmetric information. B) moral hazard. C) the sale of "lemons." D) rational ignorance.
Determine how each of the following situations would affect the demand for current consumption, the supply of current consumption, and the interest rate.
(i) Cuban immigrants, who own no capital of their own, arrive in the country. (ii) A drought lowers farmers' productivity this year, but rainfall levels are expected to return to normal next year. (iii) Scientists announce that a new lubricant that will double engine life will be available next year.