question
You know the following facts:
a) the Boston Celtics have just won the 1989 NBA championships with the LA Lakers. Both Larry Bird and Magic Johnson, wearing Converse basketball shoes, have played magnificently. As a result, millions of young boys and girls wish to emulate them in every particular.
b) Converse announces major labor strikes by 50% of their employees.
What is the effect on Price and Quantity exchanged in the market for Converse basketball shoes?
a) the Boston Celtics have just won the 1989 NBA championships with the LA Lakers. Both Larry Bird and Magic Johnson, wearing Converse basketball shoes, have played magnificently. As a result, millions of young boys and girls wish to emulate them in every particular.
b) Converse announces major labor strikes by 50% of their employees.
What is the effect on Price and Quantity exchanged in the market for Converse basketball shoes?
answer
price would increase and quantity exchanged would be indeterminate.
question
If it is observed that, in a particular market, price has risen and quantity exchanged has increased, it is likely that:
answer
demand has increased.
question
All of the following statements about price floors are true except:
answer
If the price floor is set below the equilibrium price, the price must be reduced.
question
To be effective, a price ceiling must lie:
answer
anywhere below P0
question
The quantity demanded will equal the quantity supplied at a free market equilibrium and also when:
answer
none of the above cause quantity demanded to equal quantity supplied.
question
If, in response to a price ceiling, a black market develops that gains control of all of the supply of the commodity, all of the following will be true except:
answer
quantity demanded will exceed quantity exchanged at the black market price.
question
During 1988's presidential election, Jesse Jackson, Ted Kennedy and others strongly endorsed the need for an increase in the current minimum wage. Suppose that the current minimum wage is actually increased and that the government can enforce the minimum wage and the minimum wage is actually above the equilibrium wage for at least some workers. We would expect:
answer
the number of jobs available to union workers and other relatively skilled workers to rise.
question
Excess supply for a commodity is ordinarily eliminated through market forces by:
answer
none of the above eliminate excess supply.
question
A price completely stabilized by the government buying surpluses and selling its stocks when there are shortages means that:
answer
farmers' revenues will be proportional to output.
question
You know the following facts:
a) the Boston Celtics have just won the 1989 NBA championships with the LA Lakers. Both Larry Bird and Magic Johnson, wearing Converse basketball shoes, have played magnificently. As a result, millions of young boys and girls wish to emulate them in every particular.
b) Nike invests in new equipment that significantly increases labor productivity.
What is the effect on Price and Quantity exchanged in the market for Nike basketball shoes?
a) the Boston Celtics have just won the 1989 NBA championships with the LA Lakers. Both Larry Bird and Magic Johnson, wearing Converse basketball shoes, have played magnificently. As a result, millions of young boys and girls wish to emulate them in every particular.
b) Nike invests in new equipment that significantly increases labor productivity.
What is the effect on Price and Quantity exchanged in the market for Nike basketball shoes?
answer
price would decrease and quantity exchanged would be indeterminate.
question
The quantity demanded will equal the quantity supplied at a free market equilibrium and also when:
answer
suppliers are able to sell their commodity for the black market price.
question
In 1968, there were 20 million acres of commercially valuable forestland in Utah. The timber on this land was worth roughly 2 billion dollars. In 1969, forest fires destroyed half of this timber, yet the value in the market for the remaining timber was higher (2.6 billion dollars) than in 1968.
answer
this could happen if, for whatever reason, demand for timber increased simultaneously driving up both the price and quantity demanded of timber.
question
A subsidy on a good does not:
answer
always mean that suppliers receive more and buyers pay less.
question
When the actual price of a good is above its equilibrium market price, competition among:
answer
sellers will force the actual price downward.
question
Consider the market for labor where the wage rate is the price of labor. Assume initially that the federal minimum wage equals the market equilibrium wage rate. Now assume the government increases its minimum wage to $1 above the market equilibrium wage rate. One would not expect:
answer
incomes from wages to rise for all working-class families.
question
Economic theory suggests that divorce rates are higher in urban areas as opposed to rural areas for all of the following reasons except:
answer
life tends to be less stressful in rural areas than in urban areas.
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