When considering perfect competition the absence of entry barriers implies that
A) no firm can enter the industry.
B) firms can enter but cannot get out of the industry easily.
C) all firms will earn economic profit.
D) firms can enter and leave the industry without serious impediments.
Answer: D
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Derive the budget line equation for the case where good 1 is a composite good. What is the vertical intercept and what is the slope?
What will be an ideal response?
In the view of the Classical economists, a increase in aggregate demand leads to
A) lower output levels. B) a higher price level. C) higher output levels. D) a lower price level.
What will cause the equilibrium point to move from E1 to E2?
a. a downward movement, or decrease, in price from P2 to P1
b. an upward movement, or increase, in price from P1 to P2
c. a leftward movement, or decrease, in quantity from Q2 to Q1
d. a rightward movement, or increase, in quantity from 0 to Q1
Gasoline and motel rooms are complements for many consumers. When the price of gasoline declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price elasticity between gasoline and motel rooms is
A. positive. B. more than one because both are luxuries. C. less than one because neither is a luxury. D. negative.