Suppose that a firm in an industry subject to diminishing returns to scale is initially in long run equilibrium. Which of the following will not be part of the industry adjustment process to a permanent increase in demand?
a. Some firms will temporarily make economic profits
b. Some new firms will enter.
c. The long run equilibrium price will be higher than the initial equilibrium price.
d. All of the above will be consequences.
d
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In the above figure, if the economy is at point A, which of the following is TRUE?
A) There is a recessionary gap. B) There is an inflationary gap. C) Point A is the long-run equilibrium point. D) None of the above answers are correct.
When there is an externality in a market
A) government intervention may increase economic efficiency. B) the government should use price controls to enable the market to reach equilibrium. C) the externality will move the market to an economically efficient equilibrium. D) the externality will cause the market price to be less than or greater than the equilibrium price.
Refer to Figure 8.2. As the competitive industry, not just the firm in question, moves toward long-run equilibrium, the firm will be forced to operate at what level of output?
A) 22 B) 34 C) 38. D) 50 E) 64
If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1, then:
a. the dollar has depreciated in value. b. U.S.-made goods will become less expensive to Japanese citizens. c. the dollar has appreciated in value. d. Japanese-made goods will become more expensive to U.S. citizens. e. there will be an increase in the demand for dollars in the foreign exchange market.