Refer to Figure 4-7 which shows the market for watermelons. Suppose the government imposes a price floor of Pw. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?
What will be an ideal response?
The price floor will have no effect on the market outcome. An effective price floor must lie above the free-market equilibrium. Thus, in this case the market outcome will be determined by forces of demand and supply.
Economics
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Which of the following will NOT lead to increased capital investment within a country?
A) increased uncertainty about private property rights B) increased certainty about private property rights C) increased certainty about being able to reap the gains from investing D) the decreased possibility of nationalization of private property
Economics
Under the Classical assumptions, an increase in government spending causes
A) income to rise. B) income to fall. C) interest rates to rise. D) interest rates to fall.
Economics