As the price of milk increases, what happens at the original equilibrium in the market for cereal that signals market participants that the original equilibrium must change? (Milk and cereal are complements.) A) A surplus is created by an increase in supply. B) A surplus is created by a decrease in demand. C) A shortage […]
Assume that in the market for plasma TVs there is an increase in supply. The result will be: A) an increase in equilibrium price and quantity. B) a decrease in equilibrium price and quantity. C) an increase in equilibrium quantity and uncertain effect on equilibrium price. D) a decrease in equilibrium price and increase in […]
The open economy multiplier is calculated as follows: A) 1/[1-(marginal propensity to consume + marginal propensity to invest)] B) 1/[1-(marginal propensity to consume + marginal propensity to import)] C) 1/[1-(marginal propensity to consume + marginal propensity to invest + marginal propensity to import)] D) 1/[1-(marginal propensity to consume + marginal propensity to invest – marginal […]
An increase in the number of people in the United States with health insurance could cause the cost of providing health care services to increase as the incentive for health care providers to minimize costs decreases. Indicate whether the statement is true or false ANSWER TRUE
Assume the income elasticity for a particular good has been estimated to be -0.68. Based on this information, we can infer that the good is inferior and a necessity. Indicate whether the statement is true or false ANSWER TRUE
As the price of milk increases, what would reasonably be expected to happen to the equilibrium price and equilibrium quantity of cereal? (Milk and cereal are complements.) A) Equilibrium price would increase and equilibrium quantity would decrease. B) Equilibrium price and quantity would both decrease. C) Equilibrium price would decrease and equilibrium quantity would increase. […]
The function that shows the inverse relationship between planned consumption and investment spending and the real interest rate, all else constant, is called the: A) interest-related expenditure function. B) aggregate expenditure function. C) consumption function. D) investment function. ANSWER A
Assume declining profits in the market for Internet service force several firms in the area to drop out of the market. All else constant, this would cause the: A) equilibrium price and quantity to decrease. B) equilibrium price and quantity to increase. C) equilibrium price to increase and equilibrium quantity to decrease. D) equilibrium price […]
All else constant, a cartel agreement will become more difficult to enforce as the number of firms competing the market increases and the members of the cartel produce a differentiated product. Indicate whether the statement is true or false ANSWER TRUE
In the case of a linear demand function, the marginal revenue function is twice as steep as the demand function. Indicate whether the statement is true or false ANSWER TRUE
