Changes in the growth rate of potential output and deviations of actual output from potential output are two logical explanations for:
A. short-term economic fluctuations.
B. increasing wage inequality.
C. skill-biased technological change.
D. the decline in the natural rate of unemployment.
Answer: A
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A decrease in aggregate supply can result in:
a. unemployment. b. demand-pull inflation. c. prosperity. d. cost-push inflation. e. a recession.
In competitive markets, negative economic profits are eliminated by entry to the industry
a. True b. False Indicate whether the statement is true or false
Which of the following will always be true when an economy is in long-run equilibrium?
What will be an ideal response?
The Exclusive Gift Company has a monopoly over the sale of gold hula hoops. This company is currently pricing and producing where marginal revenue is equal to marginal cost. It is selling 50 gold hula hoops at a price of $5,000 each. Total costs for the company are $300,000 of which fixed costs are $100,000. You are hired as an economic consultant to this company. You should advise this monopolist to
A. shut down in the short run and exit the industry in the long run. B. produce in the short run but exit the industry in the long run if conditions do not change. C. shut down in the short run but expand capacity in the long run if conditions do not change. D. produce in the short run and expand capacity in the long run.