In order to increase the supply of a good, producers must
A. see an increase in quantity supplied by competitors.
B. reduce their per-unit costs of producing the good.
C. convince consumers to reduce the quantity demanded.
D. cut back on labor to reduce production costs.
Answer: B
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The new growth theory asserts that profits are
A) temporary, because the discoveries that lead to profits are eventually used by all. B) an illusion, since costs are never fully covered. C) permanent, because physical activities can be replicated. D) not an essential component determining whether the economy grows or not. E) permanent, because they are derived from discoveries.
The above figure shows the U.S. market for 1 carat diamonds. Suppose the United States imposes the import quota shown in the figure. With the import quota, how many diamonds can be imported?
A) 500,000 B) 700,000 C) 400,000 D) 900,000 E) 300,000
Satisficing is the decision-making strategy that:
A. attempts to minimize the harm from losses rather than maximize the pleasure from gains. B. aims for optimal results in situations where the decision maker has perfect information. C. focuses on how one's consumption compares to the consumption of others, rather than on absolute consumption. D. aims for adequate results when achieving optimal results may necessitate an excessive expenditure of resources.
Assume the economy is at point D. What would happen to AE2 and the point of equilibrium if P increased to 110 while the autonomous parts of consumption, investment, government purchases, and net exports remained constant?
a. AE2 would shift up, and the point of equilibrium would move right. b. AE2 would shift down, and the point of equilibrium would move left. c. AE2 would not move, but the point of equilibrium would move left. d. AE2 would not move, but the point of equilibrium would move right.