In a perfectly competitive market price takers exist because there are:
A. few buyers and many sellers.
B. few sellers and buyers.
C. many buyers and sellers.
D. few sellers and many buyers.
Answer: C
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If the electric company is allowed by regulators to earn only a normal profit, it will produce at the point where
a. MR = MC b. P = MC c. MC = quantity demanded d. P = AC e. MR = AC
As the economy recovers from a recession, we should expect that demand for:
a. inferior goods will fall and demand for non-inferior goods will rise. b. all goods will rise. c. inferior goods will rise and demand for non-inferior goods will fall. d. all goods will fall. e. complements will fall.
Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________.
A) definitely falls, is indeterminate
B) is indeterminate, definitely falls
C) definitely falls, definitely rises
D) definitely rises, is indeterminate
Stagflation is the typical result of adverse shifts in the aggregate supply curve.
Answer the following statement true (T) or false (F)