On September 3, 2003, Universal Music Group announced plans to reduce the wholesale price of music CDs it distributes by an average of 25-30 percent. All else constant (i.e
, ignoring the effects of file-sharing programs), how would this change affect the retail market for new music CDs? A) Demand for CDs would increase, causing equilibrium price and quantity to increase.
B) The supply of CDs would increase, causing equilibrium price to decrease and equilibrium quantity to increase.
C) Demand for CDs would decrease, causing equilibrium price and quantity to decrease.
D) The supply of CDs would decrease, causing equilibrium price to increase and equilibrium quantity to decrease.
B
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Economists often treat the economy's capital stock as fixed because
A) labor is a more important factor of production than capital, so economists ignore capital. B) it takes a long time for new investment and the scrapping of old capital to affect the overall quantity of capital. C) there is very little capital in the economy compared with the amount of labor. D) unless the interest rate changes, the capital stock doesn't change.
A point lying inside the production possibilities curve [PPC] is not an attainable combination
a. True b. False Indicate whether the statement is true or false