Market Forces
A perfectly competitive market has .....
many buyers and many sellers
price elastic
Gross domestic product is the sum of the market value of the _______.
final goods and services
For a price ceiling to be a binding constraint on the market, the government must set it ________.
below the equilibrium price
The CPI will be most influenced by a 10 percent increase in the price of which of the following consumption categories?
a. Housing
b. Transportation
c. Medical care
d. Recreation
a. Housing
All of the following shift the supply of smartphones to the right except ________.
a. an increase in the price of smartphones
b. an advance in the technology used to manufacture smartphone
c. a decrease in the wage of workers employed to manufacture smartphones
d. manufacturers' expectations of lower smartphone prices in the future
a. an increase in the price of smartphones
In general, a steeper supply curve is more likely to be ________. (elastic, inelastic, unit elastic?)
inelastic
U.S. GDP would exclude which of the following?
a. Landscaping services purchased by a homeowner
b. Realtor services purchased by a home buyer
c. Cotton purchased by Levi Jeans
d. A new snowplow purchased by the state of Minnesota
e. The purchase of a new Honda produced in Tennessee
c. Cotton purchased by Levi Jeans
A binding price ceiling creates a(n) ________.
shortage
The amount of unemployment that the economy normally experiences is known as _______.
natural rate of unemployment
If an increase in the price of chicken leads to an increase in the demand for fish, then chicken and fish are which type of goods?
substitutes
If there is excess capacity in a production facility, it is likely that the firm's supply curve is ________.
price elastic
Gross domestic product can be measured as the sum of _______.
consumption, investment, government purchases, net exports
Which side of the market is more likely to lobby government for a price floor?
sellers
In 1989, the CPI was 124.0. In 1990, it was 130.7. What was the rate of inflation over this period?
5.4 %
Which of the following shifts the demand for pizza to the right?
a. A decrease in the price of pizza
b. A decrease in consumer incomes if pizza is a normal good
c. A decrease in the price of soda if soda and pizza are complements
d. An increase in the price of pizza
c. A decrease in the price of soda if soda and pizza are complements
A decrease in supply (shift to the left) will increase total revenue in that market if ________.
demand is inelastic
U.S. gross domestic product (in contrast to gross national product) measures the production and income of _______.
people and factories located within the borders of the United States
Suppose the equilibrium price for apartments is $1,500 per month and the government imposes rent controls of $900 per month. Which of the following is unlikely to occur as a result of the rent controls?
a. There may be long lines of buyers waiting for apartments.
b. The quality of apartments will improve.
c. Landlords may be offered bribes to rent apartments.
d. There will be a shortage of housing.
e. Landlords may discriminate among apartment renters.
b. The quality of apartments will improve.
Suppose the Fed purchases a $1,000 government bond from you. If you deposit the entire $1,000 in your bank, what is the total potential change in the money supply as a result of the Fed's action if reserve ratio is 10 percent?
$10,000
Suppose there is an increase in both the supply and demand for laptop computers. In the market for laptops, we would expect the equilibrium quantity to __________ and the equilibrium price to ____________
rise, be ambiguous
If an increase in the price of a good has no impact on the total revenue in that market, demand must be ________.
unit elastic
If nominal GDP in 2022 exceeds nominal GDP in 2021, then the production of output must have _______.
risen or fallen because there is not enough information to determine what happened to real output
Which of the following statements about a binding price ceiling is true?
a. The shortage created by the price ceiling is greater in the long run than in the short run.
b. The shortage created by the price ceiling is greater in the short run than in the long run.
c. The surplus created by the price ceiling is greater in the short run than in the long run.
d. The surplus created by the price ceiling is greater in the long run than in the short run.
a. The shortage created by the price ceiling is greater in the long run than in the short run.
If there is an increase in the price of bananas that causes consumers to purchase fewer pounds of bananas and more pounds of grapes, the CPI will suffer from _______.
substitution bias