Consider an industry that is in long-run equilibrium. An increase in demand leads to an increase in the price of the good. We know that this is
A) a decreasing-cost industry.
B) a constant cost industry.
C) an increasing-cost industry.
D) not a competitive industry.
Answer: C
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In contrast to perfect competition, in a monopolistically competitive industry:
a. new firms entering the market produce a good that is identical to the existing ones. b. new firms entering the market produce a completely different product. c. there are legal restrictions on the entry of new firms. d. new firms entering the market produce a close substitute, not an identical or standardized product. e. new firms are allowed to enter the industry but there are legal restrictions on their exit.
The presence of price controls in a market usually is an indication that
a. an insufficient quantity of a good or service was being produced in that market to meet the public's need. b. the usual forces of supply and demand were not able to establish an equilibrium price in that market. c. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. d. policymakers correctly believed that, in that market, price controls would generate no inequities of their own.
If the price level was lower than the equilibrium price level, then aggregate quantity supplied is __________ aggregate quantity demand.
Fill in the blank(s) with the appropriate word(s).
Explain how automatic stabilizers work.
What will be an ideal response?