An increase in price will lead to an increase in quantity supplied. This statement is
A) the law of supply.
B) the law of demand.
C) untrue always.
D) a normative statement.
A
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Suppose that a regulatory agency helps producers maximize economic profit. This type of regulation coincides with
A) a natural monopoly. B) a marginal cost pricing rule. C) an average cost pricing rule. D) the capture theory of regulation. E) the social interest theory of regulation.
In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to the point that a perfectly competitive market has
A) few buyers and sellers. B) no barriers to entry and exit. C) price taking by the firms. D) firms with perfectly elastic market demand.
Firms engage in explicit collusion when:
A. they predict what the other will do and attempt to undercut them. B. they collude without communicating, sustaining a price above the noncooperative price that would arise in a single competitive interaction. C. they communicate to reach an agreement about the prices they will charge. D. they communicate what type of good they will produce.
The relationship between money supply, output, and the overall level of prices is illustrated by the:
A. classical theory of inflation. B. neutrality of money. C. aggregate price level. D. measure of real output.