A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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Which of the following is true of the output level produced by a firm in long-run equilibrium in a monopolistically competitive industry?
A) It produces at minimum average cost. B) It does not produce at minimum average cost, and average cost is increasing. C) It does not produce at minimum average cost, and average cost is decreasing. D) Either B or C could be true.
An increase in price will lead to an increase in quantity supplied. This statement is
A) the law of supply. B) the law of demand. C) untrue always. D) a normative statement.
Government action will often result in the counterproductive use of resources because
What will be an ideal response?
If the absolute value of the tax elasticity of supply is 2.0, a tax increase of 10 percent will decrease output by
A. 5 percent and increase tax revenues. B. 5 percent and decrease tax revenues. C. 20 percent and increase tax revenues. D. 20 percent and decrease tax revenues.