Which of the following statements is correct?
A. Because it is subject to change, and frequently does, consumer and business confidence has only a minimal impact on future economic activity.
B. Because it has historically remained steady, consumer and business confidence has only a minimal impact on future economic activity.
C. Consumer and business confidence is extremely important and can have a great impact on future economic activity.
D. Consumer confidence is extremely important and can have a great impact on future economic activity. The same is not true of business confidence.
Answer: C. Consumer and business confidence is extremely important and can have a great impact on future economic activity.
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Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the price of salsa affect the demand for taco chips?
A) It decreases the demand for taco chips. B) It increases the demand for taco chips. C) It has no effect on the demand for taco chips. D) It will decrease the demand for taco chips only if taco chips are a normal good. E) It could increase, decrease, or have no effect on the demand for taco chips, but more information is needed to determine the impact.
Refer to Figure 4-4. What is the value of producer surplus at the equilibrium price of $15?
A) $80 B) $160 C) $240 D) $400