Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars
A. remains constant.
B. decreases.
C. initially increases, then decreases.
D. increases.
Answer: D
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A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 500 units is $1.50. The minimum possible average variable cost is $1. The market price of the product is $1.25. To maximize profits, the firm should
A. decrease production to less than 500 units. B. increase production to more than 500 units. C. continue producing 500 units. D. shut down.
Consider two countries—A and B. Country A is characterized by a command economy, absence of property rights, high entry barriers for new businesses, and forced child labor
Country B, on the other hand, is characterized by well-defined private property rights, a developed market system, and no entry barriers for new businesses. Which of the two countries is likely to oppose creative destruction more? Why?
Which of the following correctly describes the automatic mechanism through which the economy adjusts to long-run equilibrium?
A) the rightward shift of the aggregate demand curve that occurs during a recession B) the leftward shift of the short-run aggregate supply curve that occurs after a recession C) the rightward shift of the short-run aggregate supply curve that occurs after a recession D) the leftward shift of the aggregate demand curve that occurs after a recession
If the entry of new firms in a perfectly competitive industry substantially increases the market demand for resources,
a. this reduces the market price of resources. b. this raises the market price of resources. c. the market price of resources does not change. d. this lowers the ATC curves of individual firms.