Figure 10-7
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Which of the diagrams in Figure 10-7 shows an economic recession caused primarily by a change aggregate demand?
A. (A)
B. (B)
C. (C)
D. (D)
Answer: A
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A price searcher can move its marginal revenue curve closer to its demand curve if it can
A) achieve significant economies of scale. B) charge different buyers different prices for the same good. C) price at the point of unit demand elasticity. D) produce at constant marginal cost. E) set marginal revenue equal to marginal cost.
Recessions and expansions affect most strongly which type of unemployment?
A) frictional unemployment B) structural unemployment C) cyclical unemployment D) seasonal unemployment
Jennifer lives in two periods. In the first period, her income is fixed at $72,000; in the second, she is gets a 4% raise in her income. She can borrow and save at the market interest rate of 5 percent.
(A) Sketch her intertemporal budget constraint. (B) Suppose that Jennifer is unable to lend at any rate of interest, although she can still borrow at 5 percent. Sketch her new intertemporal budget constraint.
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. What is Kate's profit maximizing output?
A. 2,000 B. 1,333.34 C. 1,000 D. 4,000