A competitive market begins in a situation of long-run equilibrium. Then, there is an increase in demand. Describe the process that eventually leads to a new long-run equilibrium
The increase in demand results in firms earning positive profits. In response to the positive profits, new firms enter the market, increasing short-run supply. Eventually, short-run supply has increased sufficiently to restore zero profits. At that point the market has reached a new long-run equilibrium.
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Representative commodity money retained its value because
A) it was an actual commodity. B) it was a fiat money. C) it was backed by the government. D) it could be exchanged for an actual commodity.
Obstacles that restrict trade, either domestic or international, will
a. reduce output, income, and the general living standard of the populace. b. help people achieve higher income levels. c. help promote high rates of economic growth. d. encourage domestic business firms to expand output so they can achieve larger gains from the adoption of mass production techniques.
Fluctuations in employment and output result from changes in
a. aggregate demand only. b. aggregate supply only. c. aggregate demand and aggregate supply. d. neither aggregate demand nor aggregate supply.
How does macroeconomics differ from microeconomics?
A. The study of the opportunity cost of nations versus the opportunity cost of individuals B. The underlying principles C. The use of abstractions and models D. The use of aggregate indicators over market resource allocation