Suppose we observe that both the equilibrium price of digital cameras and the equilibrium quantity of digital cameras have increased. Which of the following events could be responsible for this?
A) technological advances in digital camera production
B) consumers' preferences changed in favor of digital cameras
C) the price of film cameras fell
D) workers who make digital cameras received a pay raise
B
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The economy suffered a mild recession in 2001. Despite the recession, home sales and durable goods sales remained high. Which of the following is a plausible explanation?
A) The Fed caused a reduction in the federal funds rate to its lowest level in 40 years. B) Home building and consumer durable purchases are always high during a recession. C) Rising inflation encouraged many to invest in the real estate market. D) The Fed's pursuit of contractionary policy stimulated these markets.
The corporate income tax in the United States
A) excludes dividends paid out. B) only taxes retained earnings. C) results in individuals' being doubly taxed on corporate earnings. D) does not apply to profits earned on exports.
Economic profits and losses are true market signals because they
A) convey information in an asymmetrical fashion. B) convey information about rewards people should anticipate experiencing by shifting resources from one activity to another. C) convey information to public officials about where to encourage people to invest and what skills people should develop. D) cause people to move into careers in both undesirable and desirable industries with equal ease.
The present value of $1 payable in two years is:
a. $1. b. $1/(1 + 2r). c. $1/(1 – 2r). d. $1/(1 + r)2.