A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.
If the market price of grills is $320, given the scenario described, Abe's consumer surplus would be:
A. $400.
B. $350.
C. $320.
D. $80.
D. $80.
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In the above figure, if the economy is initially at an equilibrium output at point A and the interest rate is r1, then an open market purchase of bonds by the Fed will
A) not have any impact on short- or long-run equilibrium real Gross Domestic Product (GDP). B) cause interest rates to decline to r2, investment to decline, and aggregate demand to shift inward to the left. C) cause interest rates to increase and output to decline. D) cause interest rates to decline to r2, investment to increase to I2, and the AD curve to shift upward to the right.
The supply of lettuce in the short run will be ________ than the supply in the long run and ________ than the supply today
A) more elastic; less elastic B) more elastic; more elastic C) less elastic; more elastic D) less elastic; less elastic