What assumption(s) is (are) necessary to generate a kinked demand curve?
a. all firms in the industry ignore the price changes made by any one firm
b. any price decrease will be ignored but price increases will be followed
c. all firms will follow a price decrease but will ignore any price increase
d. all price changes made by any firm will be followed by all of the other firms
e. price can increase, but not decrease
C
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A Basic principle of economics is:
A) knowing your customer means understanding their income. B) there are costs involved in any action or decision. C) demand equals supply. D) equilibrium is beneficial. E) size and market share are important goals for a business.
How does the equilibrium quantity traded change when there is an increase in supply and a decrease in demand?
If changes in monetary policy are going to help stabilize the economy, they must
What will be an ideal response?
A decrease in taxes (when Ricardian equivalence does not hold) causes the real interest rate to ________ and the price level to ________ in general equilibrium.
A. rise; fall B. fall; rise C. rise; rise D. fall; fall