For the general population, a 10 percent increase in the price of cigarettes leads to a
a. 1 percent reduction in the quantity demanded of cigarettes.
b. 4 percent reduction in the quantity demanded of cigarettes.
c. 10 percent reduction in the quantity demanded of cigarettes.
d. 12 percent reduction in the quantity demanded of cigarettes.
b
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In the above table, if the market is perfectly competitive and unregulated, the equilibrium price will be
A) $50 per unit. B) $60 per unit. C) $70 per unit. D) $110 per unit.
The quantity equation states that
A) M + V = P + Y. B) the money supply (M) divided by the velocity of money (V) equals the price level (P) divided by real output (Y), i.e., M/V = P/Y. C) M × V = P × Y. D) M - V = P - Y.
A price floor is:
A. a legal maximum price. B. a legal minimum price. C. a legal maximum quantity that can be sold at a particular price. D. a legal minimum quantity that can be sold at a particular price.
An externality is
a. a cost of a transaction that is borne by a third party b. a benefit of a transaction that is enjoyed by a third party c. a cost or benefit that arises when market price changes d. any cost or benefit of a transaction that is not accounted for in the market price e. the external revenue generated by a firm