An example of a black market is
A. a wholesale market.
B. scalping.
C. barter.
D. a discount market.
Answer: B
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Suppose the proportion of deposits that individuals wish to hold as cash were to rise from 5% to 10%. Then,
A) the money supply will rise because people have more cash. B) bank deposits will fall by the same amount as if the reserve-holding ratio had risen by 5 percentage points. C) the supply of high-powered money will rise because cash has risen. D) the money supply will change by the same amount as if the reserve-holding ratio had risen by 5 percentage points.
Mergers harm society
A) True. Firms merge to avoid antitrust laws and increase their prices. B) Maybe. It depends on whether the effect on prices is larger from reducing competition or increasing efficiency. C) False. Firms gain economies of scale and pass the price savings on to their customers. D) True. Total surplus is reduced when firms merge.
A tax system in which the average and marginal tax rates are the same for every level of taxable income and every change in income is an example of
A) regressive taxation. B) proportional taxation. C) progressive taxation. D) premium taxation.
If the short-run price elasticity of demand for hospital care is .27, then the long-run price elasticity is expected to be:
A. greater than .27. B. perfectly inelastic. C. less than .27. D. equal to .27.