When the government sets a price floor which is below the equilibrium? price:
A. a price ceiling will follow.
B. a shortage will develop.
C. a surplus will develop.
D. the equilibrium price will be maintained.
Ans: D. the equilibrium price will be maintained.
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The table below shows how the total utility that Alan derives from watching basketball games changes as he watches more and more games each week:
Basketball Games Total Utility Marginal Utility 1 55 2 85 3 110 4 130 5 145 6 155 Fill in the table above. Do the numbers in the table support the law of diminishing marginal utility? Explain.
There is concern that CFCs, a chemical by-product of refrigeration, are destroying Earth’s protective ozone layer, leaving us more vulnerable to cataracts and skin cancer. Suppose each air conditioner creates 10 pounds of CFCs. The demand and supply of air conditioners follow: Price (dollars) 400 350 300 250 200 Quantity demanded 10 12 14 16 18 Quantity supplied 18 16 14 12 10 What will be the free-market price and quantity, and what will be the price and quantity if the government forces suppliers to pay a $100 tax for each air conditioner produced?
What will be an ideal response?
A sudden rise in the market demand in a competitive industry leads to
a. A short run market equilibrium price higher than the original equilibrium b. A market equilibrium higher than the short run price c. Some firms exiting the market d. All of the above
Answer the following statements true (T) or false (F)
1. The current base year for the CPI is 1985. 2. If a worker’s money wage increases at a faster pace than the CPI, his or her real wage will rise. 3. As income or spending patterns change substantially, it is wise to change the base year of the CPI. 4. The CPI does not necessarily make adjustments for improvement in the quality of goods and services in the market basket. 5. Real wages are determined by multiplying money wages by the CPI.