The Phillips curve illustrates the trade-off between inflation and economic growth.
Answer the following statement true (T) or false (F)
False
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Figure 9.5Figure 9.5 shows the short-run and long-run effects of an increase in demand of an industry. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right, which of the following statements is true in the short run?
A. The market price rises to $12, which is greater than the average total cost. B. Each existing firm maximizes its profit by producing the output where marginal cost equals $12. C. Each existing firm produces two more units per hour, compared to its initial profit maximizing output level at point A. D. All of these are correct.
An entry barrier exists when firms in an industry charge the lowest price possible for their products
Indicate whether the statement is true or false
The capacity utilization rate is the ratio of ________ to ________
A) production; capacity B) capacity; production C) capacity; potential GDP D) none of the above
Which of the following is a reason why government is a participant in a market-oriented economy?
a. to enforce contracts and protect private property b. to promote collusion c. to promote the growth of natural monopolies d. to provide more inequality in the distribution of income e. all of the above