Initially, a perfectly competitive industry that has 1,000 firms is in long-run equilibrium. Then 100 firms in the industry adopt a new technology that reduces the average cost of producing the good
In the short run, the price ________, firms with the new technology make ________ economic profit, and firms with the old technology ________. A) remains the same; zero; incur economic losses
B) falls; positive; incur economic losses
C) remains the same; positive; make normal profit
D) remains the same; positive; incur economic losses
B
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With the invention of ATM machines, the public now holds less currency. As a result, we would expect to have seen
a. both the M1 and the M2 multipliers to increase over time. b. the M1 multiplier to increase while the M2 multiplier to decrease over time. c. the M1 multiplier to decrease while the M2 multiplier to increase over time. d. None of the above
A reduction in current consumption to pay for the investment in capital intended to increase future production is known as the:
A. consumption effect. B. substitution effect. C. investment trade-off. D. income effect.
The concept of opportunity cost is illustrated by: a. a movement from the interior of the production possibilities curve to the frontier
b. a movement from the production possibilities curve to its interior. c. a movement from a point on the production possibilities curve to the northeast. d. a movement along the production possibilities curve, as production of one good falls in order to increase production of another.
Patents encourage inventions because without a patent
A) other firms could enter the inventor's market by producing the same product. B) nobody would demand the inventor's product. C) the inventor would receive no tax breaks. D) all markets would be public franchises.