Refer to the graph shown. At the price of $1.60, given market demand for the product:
A. the firm will make zero economic profits.
B. there will be a shortage of the product.
C. the firm will go out of business.
D. the firm will incur losses.
Answer: A
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Based on the theory of comparative advantage, nations maximize their well being when they
A) create more jobs. B) allocate resources more efficiently. C) increase trade surpluses. D) increase exports.
If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of
a. the availability of close substitutes in determining the price elasticity of demand. b. a necessity versus a luxury in determining the price elasticity of demand. c. the definition of a market in determining the price elasticity of demand. d. the time horizon in determining the price elasticity of demand.
U.S. trade with the rest of the world is a larger share of GDP than is typical for developed countries
Indicate whether the statement is true or false
Assuming aggregate supply is upward-sloping and aggregate demand is downward-sloping, a sudden reduction in a nation’s exports will
a) cause inflation b) cause recession c) cause stagflation d) increase GDP and reduce prices e) increase GDP and raise equilibrium prices