Use the following demand and supply functions: Demand:Qd = 50 - 4PSupply:Qs = 20 + 2PIf the price is $10, there is a
A. surplus of 40 units.
B. shortage of 30 units.
C. shortage of 10 units.
D. surplus of 30 units.
E. none of the above
Answer: D
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Which of the following best describes the cause-and-effect chain of an expansionary monetary policy?
A. An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP. B. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP. C. A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP. D. An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
Each point on the demand curve indicates
a. the demand for the product. b. the quantity demanded at that price. c. the amount that people need. d. the amount people want to buy at different income levels.
If the income effect outweighs the price effect of a wage increase, the quantity of labor supplied will:
A. remain constant. B. increase. C. drop to zero. D. decrease.
Based on the demand curves for perfectly competitive firms and for monopolies, which action would be most likely to lower market price?
a. a perfectly competitive firm increasing production
b. a monopolist increasing production
c. a monopolist cutting production
d. a perfectly competitive firm cutting production