Let demand be given by P = 10 - Q; let supply be given by P = Q. What is the equilibrium price?
A. 2
B. 5
C. 10
D. 0
Answer: B
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Which of the following factors will reduce considerably the ability of a union to raise the wages of its workers?
a. an elastic demand for the goods produced by union labor b. a five-year apprenticeship before one can qualify for jobs held by union members c. high tariffs on goods produced by the union labor d. favoritism in the allocation of government contracts to firms that employ union labor
Suppose Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will:
A. benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole. B. harm chocolate workers in the short run, benefit lace workers, but benefit the nation as a whole. C. harm chocolate workers in the short run, harm lace workers, but benefit the nation as a whole. D. benefit chocolate workers, harm lace workers in the short run, but harm the nation as a whole.
Assume the exchange rate is allowed to fluctuate freely. Using the IS-LM-IP model, graphically illustrate and explain what effect a reduction in government spending will have on the domestic economy. In your graphs, clearly label all curves and equilibria
What will be an ideal response?
The most important determinant of the elasticity of supply is
A. the price of the good. B. the time period firms have to adjust to the new price. C. the proportion of the good in the budget of consumers. D. whether the good is a durable good or a nondurable good.