The idea that supply creates its own demand is known as
A) the law of supply.
B) the law of demand.
C) Keynes' law.
D) Say's law.
Ques. 2Advocates of a progressive income tax use arguments EXCEPT for which of the following?
A) A progressive tax system taxes according to ability to pay.
B) A progressive tax system taxes according to benefits received.
C) A progressive tax system helps redistribute income away from the rich and towards the poor.
D) A progressive tax system maximizes government revenues.
Ques. 3Four points on a demand schedule are given: 12, 2 units; 10, 1 unit; 15, 1.5 units; and 2, 4 units. Which combination is inconsistent with the law of demand?
A) 12 and 2 units
B) 10 and 1 unit
C) 15 and 1.5 units
D) 2 and 4 units
Ques. 4Economists assume people are motivated by
A) unlimited resources.
B) pride.
C) self-interest.
D) social justice.
Ques. 5Society is likely to over-allocate resources to produce goods that
A) are public goods.
B) are merit goods.
C) generate positive externalities.
D) generate negative externalities.
Ques. 6Suppose the equilibrium quantity of ethanol has decreased. Which of the following could have caused this change?
A) a decrease in demand
B) an increase in supply
C) an increase in quantity demanded
D) an increase in quantity supplied
Ques. 7The market clearing price of corn has just increased. Which of the following could have caused this change?
A) a reduction in demand
B) a reduction in supply
C) an increase in quantity demanded
D) an increase in quantity supplied
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