How would the discovery of a previously unknown large reserve of oil affect the short-run aggregate supply curve and why? What other change could have the same effect?
What will be an ideal response?
This discovery should mean a lower price of oil, which is a factor that drives production costs down. The result would be a rightward shift in the short-run aggregate supply curve. Such a shift would also occur as a result of a change in expectations of future inflation (specifically expectations of lower inflation).
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The demand curve is the same as another curve. Which curve is the same as the demand curve? Why are the curves the same?
What will be an ideal response?
Sue offers to pay Al $50 for each painting of his that she sells in her gallery. Each painting sells for $75. The cost to Al of producing each painting is $55. Which of the following statements is TRUE about this contract?
A) This contract is efficient. B) This contract maximizes joint profit. C) Al will not participate in this contract. D) This is a fixed-fee contract.
What impact would a severe drought that destroys the wheat crop in several areas of the United States have on the market for wheat?
a. The supply of wheat would fall. b. The supply of wheat would rise. c. The demand for wheat would fall. d. The demand for wheat would rise.
Suppose the own price elasticity of demand for good X is ?0.25, and the quantity of good X increases by 5 percent. What would you expect to happen to the total expenditures on good X?
A. Remain unchanged B. Decrease C. Increase D. Neither increase, decrease nor remain unchanged