Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a
A) vertical line where Q = 10.
B) vertical line where Q = 100.
C) vertical line where Q = 1000.
D) horizontal line where Q = 1000.
C
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A beautiful garden that increases the value of the homes in the neighborhood is considered:
A. an inferior good. B. a positive externality. C. a negative externality. D. a normal good.
A specified amount of a claim that the insurance company does not need to pay is called:
A) coinsurance B) deductible C) copayments D) premium
One way a government can eliminate a market failure
A) is to regulate the price so that it equals marginal cost. B) is to implement a price floor equal to marginal cost. C) is to regulate the price so that it is below average cost. D) None of the above solutions will eliminate a market failure.
Suppose lower interest rates suddenly lead to an injection of $325 additional investment spending into the economy and the marginal propensity to consume is 0.80.Table 10.1Spending CyclesChange in this Cycle's Spending and IncomeCumulative Increase in Spending and IncomeFirst-cycle spending$325$325Second-cycle spending________________Third-cycle spending________________In Table 10.1, what is the cumulative increase in expenditure by the end of the second cycle?
A. $585. B. $260. C. $65. D. $390.