By buying bonds, the Fed decreases the quantity of reserves in the banking system and decreases the money supply.

At a price of $4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while United Gadgets is willing to supply 10,000 gadgets. If the price were to rise to $8 per unit, their respective quantities supplied would rise to 45,000 and 25,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets?

A. 1.2 B. 1.0 C. .833 D. .80

In which of the following cases would the consumer surplus most likely be greatest for an umbrella?

a. at a ski resort experiencing a snowstorm during the slow part of the season b. on a dry, cloudy day in a region that rarely receives measurable rainfall c. in a major city on a rainy day that was predicted well in advance d. when a downpour approaches a large, unprepared crowd in an open area