What happens if the price of a product is below the equilibrium price?
A) There will be a surplus of the product.
B) There will be an excess demand for the product.
C) The buyers will stop purchasing a "cheap" product.
D) The producer will lower the price to sell more product.
B
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When people cannot be excluded from consuming a good, even if they have not paid for the good, competitive markets would
A) produce more of the good than society needs. B) allocate more resources than the efficient amount to the production of the good. C) produce the good so that people could enjoy a "free ride." D) produce less than the efficient quantity. E) eliminate the deadweight loss.
Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result
A) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. B) aggregate demand will increase by 2.5%. C) the purchasing power of wages will rise if wages increase by 2.5%. D) the short-run aggregate supply curve will shift to the left as wages increase.