Which of the following statements is true?
A) An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.
Answer: A
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Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. At a price of $75, the quantity demanded in the market would be
A) 6 oz. B) 46 oz. C) 52 oz. D) 127 oz.
How does the break-even inflation rate differ from the expected inflation rate as measured in surveys?
A) They are very close to each other. B) The break-even inflation rate varies less than the expected inflation rate from surveys. C) The break-even inflation rate varies more than the expected inflation rate from surveys. D) The break-even inflation rate is always several percentage points higher than the expected inflation rate from surveys.