Will a large increase in the demand for a good cause a large increase in its price?
A) No; an increased demand is associated with lower prices.
B) Not if the demand for the good is highly elastic.
C) Not if the demand for the good is highly inelastic.
D) Not if the supply of the good is highly elastic.
E) Not if the supply of the good is highly inelastic.
D
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Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has
A. has confused association and causation. B. cannot test his theory because his observations violate the ceteris paribus assumption. C. used normative economics to answer a positive question. D. built a model with too many variables.
Data from the registrar's office at Gigantic State University indicate that over the past 20 years tuition and enrollment have both increased. From this information we can conclude that:
A. GSU's supply curve of education is downsloping. B. the supply of education provided by GSU has also increased over the 20-year period. C. school-age population, incomes, and preferences for education have changed over the 20-year period. D. higher education is an exception to the law of demand.