Refer to Figure 12-20. If the market price is P1, what is the allocatively efficient output level?
A) Q0
B) Q1
C) Q2
D) There is no allocatively efficient output level because the firm is making a loss.
B
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According to the law of demand, if other relevant factors remain unchanged, then a rise in the price of a commodity will cause
a. a reduction in the equilibrium quantity. b. excess supply. c. suppliers to reduce their production in reaction to the lower demand. d. a fall in the quantity demanded.
If there are economies of scale in the transactions demand for money, as income increases, money demand
A) increases proportionately. B) increases less than proportionately. C) increases more than proportionately. D) does not change.
A Decrease in price will result in an increase in total revenue if:
a. the percentage change in quantity demanded is less than the percentage change in price. b. the percentage change in quantity demanded is greater than the percentage change in price. c. demand is inelastic. d. the consumer is operating along a linear demand curve at a point at which the price is very low and the quantity demanded is very high.
The substitution effect of a wage decrease in the work-leisure model results in the worker choosing to
a. work less than before. b. work more than before. c. possibly work more or less than before. d. work more with a higher level of consumption.