If the demand for jelly increases, and the price of grapes (used to make jelly) rises:
A. the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or fall.
B. the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or fall.
C. the equilibrium price of jelly falls and the equilibrium quantity of jelly rises.
D. the equilibrium quantity of jelly falls and the equilibrium price of jelly might rise or fall.
Answer: A
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Using the information in Table 6.2, the percent increase in prices over the two year period from 2014 to 2016 is approximately
A) 26 percent. B) 31 percent. C) 38 percent. D) 98 percent.
Which of the following would be counted as investment in the national income accounts?
a. the purchase of a newly issued stock b. the purchase of a newly built apartment house c. the purchase of a newly minted coin d. the payment of tuition at a private college
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.
The monopolistically competitive firm's economic profits tend toward zero in the long run. Why is this so?
A. If a monopolistically competitive firm is profitable for more than 2 years, the Justice Department orders a corporate restructuring to pull the company back to a normal rate of return. B. Monopolistically competitive firm's are rarely able to maintain the corporate discipline necessary to sustain profits in the long run. C. In the long run, other firms will successfully offer substitutes for the profitable firm's product, and competition will eliminate economic profits. D. Even though the monopolistically competitive firm can successfully maintain barriers to entry, keeping competition at bay becomes very expensive.