Which of the following statements best describes the parity concept?
A. The prices of farm commodities should vary inversely with changes in the prices-paid index
for farmers.
B. Because of productivity increases, farmers are entitled to the same real income for a
smaller volume of output.
C. The money incomes of farmers should always be the same, regardless of increases or
decreases in the prices of the products they buy.
D. The production of a given real output entitles the producer to the same real income over
time.
Answer: D
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Which of the following is true of perfect competition but is not true of monopolistic competition?
a. The firm faces a downward-sloping demand curve. b. The firm faces a downward-sloping marginal revenue curve. c. The firm will earn zero economic profit in the long run. d. The firm will produce at a point where price equals marginal cost.
Which of the following is a characteristic of a competitive price-taker market?
A. Profit maximizing firms in the market will expand output until price equals average variable cost. B. The market demand curve for the product is a horizontal line. C. There are many firms in the market, each producing a small share of total market output. D. The product produced by each of the firms is differentiated.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Holding everything else constant, a decrease in the price of GPS systems will result in
A) a decrease in the supply of GPS systems. B) an increase in the quantity of GPS systems demanded. C) an increase in the demand for GPS systems. D) an decrease in the quantity of GPS systems demanded.