Refer to Figure 3-5. In a free market such as that depicted above, a shortage is eliminated by
A) a price decrease, decreasing the supply and increasing the demand.
B) a price increase, increasing the quantity supplied and decreasing the quantity demanded.
C) a price increase, increasing the supply and decreasing the demand.
D) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
B
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Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly ________ its price and ________ its quantity
A) raises; increases B) raises; decreases C) lowers; increases D) lowers; decreases
Refer to Table 4-4. Suppose that the quantity of labor demanded increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $8.00; Q = 390,000 B) W = $9.50; Q = 380,000 C) W = $10.00; Q = 390,000 D) W = $8.50; Q = 380,000
Which of the following best explains why making air travel completely safe is not efficient?
a. After some level of safety is reached, making airplanes even safer is not worth the opportunity cost that would be incurred. b. Because one can't put a price on human life, airplane safety generally doesn't matter economically. c. The benefit from additional airplane safety will generally rise as airplanes are made safer, more than offsetting the opportunity cost involved. d. The question is misleading--making airplanes safer is always efficient.
Which of the following is a Fed tool?
A. Federal funds rate B. Stock prices C. Discount rate D. Interest rate spreads