Refer to the information provided in Figure 12.3 below to answer the question(s) that follow. 
Figure 12.3
Refer to Figure 12.3. The DVD industry is a constant-cost industry. As the demand for DVD players shifts from D to D', which of the following is least likely to result?
A. The demand for DVDs will increase.
B. If the market for DVD players is perfectly competitive, economic profits in this industry will increase in the short run, but will fall back to zero in the long run.
C. If the market for DVD players is competitive, the price will increase to $5.00 in the short and long run.
D. More resources will be allocated to produce DVD players.
Answer: C
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The term capital in economic theory refers to
A) any privately owned resource. B) bonds, stocks, and similar financial assets. C) money available for lending or spending. D) produced goods used to produce future goods. E) savings out of income.
The “law” of diminishing returns
A. is deduced from the basic biochemical relationship of agricultural theory. B. was constructed as the basis of observation during experiments on the impact of fertilizer on output in the 1930s. C. is based on regular observations of input-output relationships over the last two centuries. D. is borrowed from physical laws related to conversion of matter and energy.
To stabilize the economy rational expectations theorists favor the use of
A. wage and price controls. B. discretionary fiscal policy. C. discretionary monetary policy. D. policy rules.
The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A