What is likely to happen to the allocation of resources if there is a sudden increase in the demand for a good produced by a perfectly competitive industry?
What will be an ideal response?
If there is an increase in the demand for a good produced by a perfectly competitive industry, the equilibrium price in the industry will increase and the existing firms will earn higher profits. This will act as an incentive for newer firms to enter the industry. As such, resources and firms will move into the industry because of the sudden increase in the demand for this good.
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According to the infant industry argument for trade protectionism:
A. trade barriers must be used to protect domestic workers. B. new industries need to be shielded from competition in the early stages of learning by doing. C. tariffs imposed to aid new industries should never be removed. D. new industries are capable of competing with established rivals.
What are the two meanings of interest in economics?
What will be an ideal response?
Under a strict liability standard, the person who causes an accident is liable
a. whether or not he has been negligent. b. if he could have prevented the accident at a cost less than the damages caused. c. if he could have prevented the accident at a cost less than the damages caused times the probability of the accident's occurrence. d. unless the plaintiff could have prevented the accident at a cost less than the damages incurred times the probability of the accident's occurrence.
The U.S. Supreme Court ruled that the tax on food processors in the 1933 Agricultural Adjustment Act (AAA) was unconstitutional
Indicate whether the statement is true or false