Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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Assume that Sharon purchases $5,000 worth of a stock. To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate. If the stock's value decreases by 10% in one year and she has to sell the stock at that time, what is her rate of return?
a. ?10% b. ?50% c. ?78% d. ?156%
Mary and Cathy are roommates. Mary assigns a $30 value to smoking cigarettes. Cathy values smoke-free air at $15 . Which of the following scenarios is a successful example of the Coase theorem?
a. Cathy offers Mary $20 not to smoke. Mary accepts and does not smoke. b. Mary pays Cathy $16 so that Mary can smoke. c. Mary pays Cathy $14 so that Mary can smoke. d. Cathy offers Mary $15 not to smoke. Mary accepts and does not smoke.
How does the imposition of a tariff reduce the price of imports?
A. At the lower quantity supplied, the price to the importer is lower than if there were free trade. B. At the lower quantity demanded, the price to the importer is lower than if there were free trade. C. Supply of the product is increased from domestic production, reducing the price of the imports. D. Demand for the product is decreased, so that price must fall.
Decreasing marginal returns
A) can be avoided if a firm watches costs. B) affect all firms, but at different production levels. C) affect all firms at the same level of production. D) disappear when the firm produces a large enough level of output. E) mean that the average product of labor starts as a negative number and then becomes positive.