A maximum price set below the equilibrium price will:
A. cause excess demand and increase total surplus.
B. cause excess demand and decrease total surplus.
C. cause excess supply and increase total surplus.
D. cause excess supply and decrease total surplus.
Answer: B
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Prof. Epstein's normative theory of law argues that the common law ought to
a. promote a more desirable distribution of income. b. impose punitive damages more often. c. seek economic efficiency. d. promote the Good Samaritan ethic.
All of the following are true, except
a. Some consumers may infer high prices of a good to signal high quality b. Low prices can also signal high quality c. Promotional campaigns do not affect consumer's perception on quality d. It makes more sense to raise price when advertising makes demand less elastic
"Compensating wage differentials" arise because:
a. workers possess different skills. b. workers prefer the characteristics of some to those of others. c. firms pay higher wages for workers with higher marginal productivities. d. firms discriminate in hiring.
The increase in world oil prices during the 1970s was
a. the result of depletion of world reserves of oil. b. artificially created by OPEC. c. the result of extremely high growth rates in industrialized countries. d. fully reversed by 1982.