If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will
a. increase producer surplus.
b. reduce producer surplus.
c. not affect producer surplus.
d. Any of the above are possible.
a
Economics
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An individual deposits a certain amount in a bank. The amount deposited is referred to as ________
A) interest B) principal C) installment D) time value of money
Economics
Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will
A) spend all $30 on tea. B) spend all $30 on coffee. C) spend $20 on coffee and $10 on tea. D) be indifferent between any bundle of coffee and tea costing $30.
Economics