State the law of supply and explain it.
What will be an ideal response?
The law of supply indicates the direct or positive relationship between price and quantity supplied. This law states that when the price of a good increases, sellers will make more of that good available for a specified period of time, other things being equal. Other things being equal, a higher price gives producers more incentive to produce and sell more of that product. Conversely, when the price of a good decreases, sellers will make less of that good available for a specified time period.
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The crowding out effect of expansionary fiscal policy when the money supply is not increased is confirmed by
A) the Keynesian econometric models only. B) the Monetarist models only. C) both the monetarist and Keynesian econometric models. D) neither the Monetarist nor the Keynesian econometric models.
Given the information in Figure 14.4, the monopsony wage rate is:
A) W1. B) W2. C) W3. D) W4. E) none of the above
In an inverse relationship
A) one variable rises while the other falls. B) both variables rise together. C) both variables fall together. D) the two variables have nothing to do with each other.
Consider an unregulated monopoly in Figure 13.2. Suppose that a second firm enters the market. As a result, the demand curve facing each firm lies entirely below the long-run average cost curve. Because having two firms in the industry makes both firms unprofitable, then the industry is classified as:
A. a natural monopoly. B. a duopoly. C. a monopolistic competitor. D. a pure competitor.