Why does an increase in the supply of computers lead to a lower price for a computer?
What will be an ideal response?
When the supply of a good, such as computers, increases, the supply curve shifts rightward. This shift means sellers are more willing and more able to sell computers at all prices than they were before. With this change, a surplus of computers results. The surplus forces the price to fall, which, when the price falls enough, eliminates the surplus.
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Which of the following is true of the output level produced by a firm in long-run equilibrium in a monopolistically competitive industry?
A) It produces at minimum average cost. B) It does not produce at minimum average cost, and average cost is increasing. C) It does not produce at minimum average cost, and average cost is decreasing. D) Either B or C could be true.
Under both perfect competition and monopoly, a firm:
A. faces a perfectly elastic demand curve. B. maximizes profit by setting marginal cost equal to marginal revenue. C. sells at a price equal to the minimum average total cost. D. sells at a price equal to marginal cost.
Suppose you place $10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If you expect inflation to be 5 percent or lower, then you are expecting to earn a real interest rate of at least:
A. 1.6 percent. B. 3 percent. C. 4 percent. D. 5 percent.
Which of the following correctly describes the relationship between economic efficiency and economic equity?
A) They are both automatically achieved in a free market economy. B) They always call for opposite outcomes. C) There is no conflict between the two goals. D) There is often a trade-off between the two.