Suppose the market-clearing price of guitars is $500, but the prevailing price is currently $700. Pick the correct statement
A) There is a shortage of guitars.
B) Guitar sellers would not be able to successfully sell all they planned to sell.
C) Guitar buyers would not be able to successfully buy all they planned to buy.
D) All of the above are true.
E) None of the above is true.
B
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The free-rider problem with a public good leads to
A) inefficiency if the good is provided by only private markets with no government action. B) overproduction if the good is provided by private markets. C) underproduction if the good is provided by the government. D) None of the above answers is correct.
How do firms in monopolistic competition compete?
What will be an ideal response?
Suppose the current level of output is 5000 and the elasticity of output with respect to capital is 0.4. A 10% increase in capital would increase the current level of output to
A) 5020. B) 5050. C) 5200. D) 5500.
The classical quantity theory of money states that
A. money is a medium of exchange necessary for the efficient functioning of the economy. B. increases in the stock of money result in greater increases in the price level. C. decreases in the stock of money increase the price level. D. increases in the stock of money result in proportionate increases in the price level.