If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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If a union is unable to increase the demand for its workers, then success at raising the wage rate paid its members means that
A) all union members receive a higher wage. B) some union members will lose their jobs. C) more union members will be hired. D) the union will push for a decrease in the minimum wage.
In monopolistic competition, firms sell a differentiated product. In perfect competition, firms sell an identical product. How do these markets differ as a result?
What will be an ideal response?
All of the following are possible consequences of noise traders EXCEPT
A) increased volatility in the financial market. B) asset prices differing from fundamental values. C) herd behavior contributing to speculative bubbles. D) reduced volatility of asset prices.
Kim owns a small business in Denver. She travels frequently, meeting with important customers, and attending conferences. Kim hired Matt to work in the Denver office as the day-to-day general manager of the business
a. This is a moral hazard problem since Matt may not work as hard as Kim would like when he is not monitored. b. Kim choosing to hire Matt is an example of adverse selection since it is possible that Matt will not work as hard as Kim expects. c. Kim will most likely pay Matt a lower salary than normal since Kim will not be there to monitor Matt's work effort, and since Matt will not likely work hard knowing Kim cannot monitor his effort. d. Kim is the agent and Matt is the principal.