When existing firms lose customers and profits due to entry of a new competitor, a
a. predatory-pricing externality occurs.
b. consumption externality occurs.
c. business-stealing externality occurs.
d. product-variety externality occurs.
c
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An increase in demand for French fries will cause equilibrium wage rates:
a. and quantities of potato workers hired to rise. b. and quantities of potato workers hired to fall. c. to rise and quantities of potato workers hired to fall. d. to fall and quantities of potato workers hired to rise. e. and quantities of potato workers hired to stay the same.
In the short run, we assume that the number of firms in a perfectly competitive market:
A. varies if perfect information is present. B. is fixed. C. is equal to the number of firms in the long-run. D. varies more than the long-run equilibrium.
Which of the following is an example of an adverse selection problem?
a. A customer purchases four apples, two of which are bruised. b. A card shop puts its Halloween merchandise on sale on November 1st. c. A young job applicant fails to reveal that she was fired from her last job because she was incompetent. d. A man rents a car and then drives it less carefully and fills it with cheaper gas than he would if he owned it.
If consumer confidence falls, then aggregate demand shifts
a. right, raising the inflation rate above its previous level. b. right, lowering the inflation rate below its previous level. c. left, raising the inflation rate above its previous level. d. left, lowering the inflation rate below its previous level.