Suppose an economist collects the following data between May and December of a given year: gasoline prices rose sharply, consumer incomes remained constant, consumers purchases of fuel efficient vehicles remained constant from the previous year, the size of the population did not change, sales of gasoline decreased by 15 percent. Which of the following theories could be tested with this information?
A. When the price of gasoline rises, gasoline purchases fall.
B. When consumer incomes rise, gasoline purchases rise.
C. When the population increases, purchases of fuel efficient vehicles increase.
D. No economic theory could be tested with this information.
Answer: A
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An important difference between a perfectly competitive firm and a monopolist is that
a. the perfectly competitive firm tends to be larger b. only the monopolist attempts to maximize profit c. only the perfectly competitive firm maximizes profit d. the perfectly competitive firm faces a horizontal demand curve and the monopolist faces a downward-sloping demand curve e. only the monopolist maximizes profit at the quantity where marginal cost equals marginal revenue
If the government imposes a maximum price on rental apartments that is below the equilibrium price, we can expect to see all of the following except:
A. landlords doing less maintenance to their rental units. B. new apartment units being built. C. renters spending more time searching for apartments. D. some building owners converting their apartments to condominiums.
A contestable market is one where:
A. there are infinitely many firms. B. entry necessarily occurs. C. there is the legitimate threat of entry. D. firms can maintain the monopoly price.
Which of the following would be included in the GDP of the United States?
A. Boeing builds a plane in Seattle that is sold to Air Canada. B. Planet Hollywood serves customers in a restaurant in Hong Kong. C. Chrysler produces a car in Germany that is sold in Michigan. D. Nestle produces a candy bar in Switzerland that is sold in San Francisco.