Consider a market that is in equilibrium. If it experiences both a decrease in demand and a decrease in supply, what can be said of the new equilibrium? The equilibrium:
A. price and quantity will both rise.
B. quantity will definitely fall, while the equilibrium price cannot be predicted.
C. price and quantity will both fall.
D. price will definitely fall, while the equilibrium quantity cannot be predicted.
Answer: B
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During the American Revolution, Washington’s army nearly starved to death after price controls were enacted to “help” buy food for the army at affordable prices. The Continental Congress later passed a law that
A. exhorted the public to obey the law and help supply food to the army. B. passed tax increases to punish those who refused to sell the food. C. revised the American Law of Supply and Demand. D. overrode local ordinances and essentially repealed the price controls. E. called for the repeal of other price control measures.
One reason governments impose taxes is to ________
A) reduce the number of transactions in an economy B) redistribute funds via transfer payments C) increase competition among producers D) increase the volume of exports
Which of the following statements is correct?
a. Monopolistic competition is similar to monopoly because both market structures are characterized by firms being price makers rather than price takers. b. Monopolistic competition is similar to perfect competition because both market structures are characterized by differentiated products. c. Monopolistic competition is similar to oligopoly because both market structures are characterized by strategic interaction between firms in the market. d. Monopolistic competition is similar to perfect competition because both market structures are characterized by perfectly elastic demand curves for firms.
Suppose the typical household spends $3,500 on goods and services during the month of January, and $4,300 on the same goods and services in February. Using January as the base period, what is the consumer price index for February?
a. 151.4 b. 81.4 c. 55.1 d. 122.9