Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. Which of the following is true?
A) If the price of iced tea is $3, producers will sell 30,000 units of iced tea but this output will be economically inefficient.
B) If the price of iced tea is $3, consumers will purchase more than the economically efficient output.
C) Both 10,000 and 30,000 are economically inefficient rates of output.
D) If the price of iced tea is $3, the output will be economically efficient but there will be a deadweight loss.
C
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Moving up (to the left) along a linear demand curve, the price elasticity of demand
A) decreases. B) does not change. C) increases. D) at first increases and then decreases.
From an initial IS-LM equilibrium with normally-sloped IS and LM curves, the money supply falls. At the new IS-LM equilibrium we have some combination of a ________ income and a ________ interest rate
A) higher, higher B) higher, lower C) lower, higher D) lower, lower