Refer to the above graph. What combination would most likely cause a shift from AD 1 to AD 3?
a. An increase in taxes and an increase in government spending
b. A decrease in taxes and a decrease in government spending
c. An increase in taxes and a decrease in government spending
d. A decrease in taxes and an increase in government spending
Answer: c. An increase in taxes and a decrease in government spending
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A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4, marginal revenue is $2.50, and marginal cost is $2.50. This firm is operating
A. with a loss. B. at the break-even point. C. with positive profits. D. at a nonoptimal level of output.
Describe the conditions under which monopoly exists. Give two examples
What will be an ideal response?
Entry continues as long as
A) economic profits are zero. B) accounting profits are positive. C) accounting profits are positive and economic profits are negative. D) economic profits are positive.
Suppose the U.S. was to experience a series of terrorists' attacks aimed at keeping consumers away from large shopping areas. Supposing further that the primary effect is for consumer confidence to decrease, this would likely
A. decrease aggregate demand. B. increase aggregate demand. C. decrease aggregate supply. D. increase aggregate supply.