The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets
When the price ceiling is in place and taking account of the resources lost in search, consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed. A) decreases; increases
B) decreases; decreases
C) increases; increases
D) increases; decreases
E) does not change; increases
B
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Which of the following is NOT a characteristic of competitive markets?
A) standardized product B) purchases and sales of individual traders are small relative to the total volume traded C) prices adjust quickly D) there are relatively few sellers
A change in one input price will cause the slope of the budget line to change
a. True b. False Indicate whether the statement is true or false
Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket. Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers. Which of the following statements is not correct?
a. Use of the beach by the nine new beachgoers will yield a negative externality. b. The town can reduce the congestion externality by raising the fee to access the beach. c. An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion. d. Each of the nine friends would have been better off staying at home.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C