The analysis of Friedman and Phelps can be summarized in the following equation where a is a positive number:
a. Unemployment Rate = Natural Rate of Unemployment - a(Actual Inflation - Expected Inflation).
b. Unemployment Rate = Natural Rate of Unemployment - a(Expected Inflation - Actual Inflation).
c. Unemployment Rate = Expected Rate of Inflation - a(Actual Inflation - Expected Inflation).
d. Unemployment Rate = Actual Rate of Inflation - a(Actual Unemployment - Expected Unemployment).
a
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Consider a firm with constant marginal cost that behaves competitively. A horizontal merger lowers the firm's marginal cost and causes the firm to behave like a monopoly. How does the merger affect producer's surplus, consumers' surplus, and social gain? Explain.
What will be an ideal response?
An import ban results in
A) an increase in the product's price. B) a decrease in the quantity of the product bought and sold. C) a decrease in the supply of the product. D) all of the above.
Average variable cost equals
A) fixed cost divided by output. B) total variable cost divided by output. C) marginal cost divided by output. D) marginal cost plus fixed cost. E) marginal cost multiplied by output.
In the long run, the quantity supplied of most goods
a. will increase in almost all cases, regardless of what happens to price. b. cannot respond at all to a change in price. c. can respond to a change in price, but the change is almost always inconsequential. d. can respond substantially to a change in price.