Above-normal profits earned by existing firms in a perfectly competitive market will eventually lead to:
a. exit of the firms from the market.
b. an increase in the market price of the good.
c. entry of new firms into the market.
d. a decrease in the aggregate supply.
e. the existing firms emerging as price makers.
c
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
Consumers buy less of a good as its price increases because:
a. production costs have risen. b. substitute goods are now relatively cheaper. c. the income of consumers has effectively risen. d. the higher price will make the good more valuable to each consumer.
Why do environmentalists worry about faster economic growth? Economists concede that faster growth is not always better. Why?
What will be an ideal response?
The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is
A. wages + rent + interest + profits + indirect business taxes. B. wages + rent + interest + profits. C. wages + rent + interest + profits + indirect business taxes + depreciation. D. consumption + investment + government spending + net exports.