Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C
B. B; C
C. B; A
D. D; B
Answer: D
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A monopsony restricts the quantity of a factor demanded to force down the price of the factor and increase profits
Indicate whether the statement is true or false
A monopolistic firm will shut down if
A) P < ATC for every level of output. B) P > ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output.
According to the availability heuristic, the more easily we can recall examples of an event:
A. the more we like the event. B. the less we like the event. C. the more likely we judge the event to be. D. the less likely we judge the event to be.
Which of the following statements accurately shows the relationship between scarcity and resources?
a. There are enough inputs. b. There is a limited amount of inputs. c. There are enough outputs. d. There is a limited amount of outputs.