According to the substitution effect, a decrease in the price of a product leads to an increase in the quantity demanded because buyers:
a. purchase more complementary goods.
b. purchase more substitute goods.
c. purchase fewer substitute goods.
d. have more real income.
c
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Suppose a previously competitive labor market turns into a monopsony. The labor supply curve faced by the new monopsonist is:
a. above the labor supply curve under perfect competition. b. the market supply curve of labor. c. below the labor supply curve under perfect competition. d. changed because workers are now more willing to supply labor. e. perfectly horizontal.
If a demand shock causes an economy to operate at a point above potential GDP, then
a. the aggregate supply curve will shift to return the economy to the original point of equilibrium b. the economy will correct itself through rising wages and prices c. this short-run equilibrium point will become the new long-run equilibrium GDP d. the economy will correct itself through falling wage rates and prices e. the shock is said to be a negative demand shock
In an imperfectly competitive industry
A. a single firm will be able to sell all of its output at whatever price it wants to charge. B. the government will always regulate the output price. C. a single firm has no control over the price of its output. D. a single firm has some control over the price of its output.
A jobless recovery occurs when
A. only low-quality jobs are created in a recovery. B. no jobs are created in an economy after a recession ends. C. employment continues to fall at the beginning of a recovery. D. most of the new jobs created in a recovery are overseas.