Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a
a. shortage to exist and the market price of chocolate-dipped strawberries to increase.
b. shortage to exist and the market price of chocolate-dipped strawberries to decrease.
c. surplus to exist and the market price of chocolate-dipped strawberries to increase.
d. surplus to exist and the market price of chocolate-dipped strawberries to decrease.
d
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When the price of a good is below its equilibrium level under perfect competition,
A. consumers would benefit from an expansion of output. B. some consumers are earning larger consumer’s surpluses than they would in equilibrium. C. the market is not operating at maximum efficiency. D. All of the responses are correct.
Inflation only results in reduced unemployment when the expected inflation rate and actual inflation rate are the same.
Answer the following statement(s) true (T) or false (F)
When the money supply increases at the same time that velocity is decreasing, total spending will
A) always rise. B) always decline. C) fall if the decrease in velocity is relatively less than the increase in the money supply. D) fall if the decrease in velocity is relatively greater than the increase in the money supply.
Which of the following does not illustrate the free rider problem?
A. Frank enjoys the fireworks from his lawn and does not purchase a ticket to view the display from the stadium. B. Amy does not contribute to public television, but she watches it every day. C. Roger refuses to help pay for the private security officer who patrols his neighborhood. D. Amanda, a taxpayer, prefers to check out books from her local library rather than purchasing them herself.