A surplus of a product will arise when price is:
A. above equilibrium, with the result that quantity demanded exceeds quantity supplied.
B. above equilibrium, with the result that quantity supplied exceeds quantity demanded.
C. below equilibrium, with the result that quantity demanded exceeds quantity supplied.
D. below equilibrium, with the result that quantity supplied exceeds quantity demanded.
Answer: B
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When estimating a short-run average variable cost function,
A. the intercept must be forced to equal zero. B. the cost data must be inflation-adjusted. C. at least one input must have been constant during the period in which the data were collected. D. both b and c E. all of the above
If a firm can earn a profit stream of $50,000 per year for 10 years, that profit stream is worth
A) more than $500,000 today. B) $500,000 today. C) less than $500,000 today, but a positive amount. D) nothing today E) some amount, but whether it is more, less or the same as $500,000 cannot be determined.
Which of the following is not a technical barrier to entry in a monopolized market?
a. A patent b. Decreasing average cost c. A low cost method of production known only by monopolists d. Increasing returns to scale
The real balances effect predicts that higher prices:
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less. b. make people worse off by reducing the value of their wealth, leading them to save less and spend more. c. make people better off by increasing the value of their wealth, leading them to save less and spend more. d. increase borrowing, leading to higher interest rates and less investment. e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods.