Refer to Figure 2.1. A movement from point a to point b is most likely caused by:
A. a decrease in the price of the good.
B. an increase in consumers' incomes, assuming the good is normal.
C. an increase in the price of a complementary good.
D. a decrease in consumers' incomes, assuming the good is normal.
B. an increase in consumers' incomes, assuming the good is normal.
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To maximize its revenue
A) a firm facing inelastic demand should always raise its price. B) a firm facing elastic demand should always raise its price. C) a firm should always charge the highest price possible regardless of the elasticity of demand. D) None of the above answers is correct.
If the economy is growing beyond potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) the money supply and a decrease in interest rates. B) taxes. C) oil prices. D) government purchases.
Happy Cows is a dairy farm that is currently earning $20,000 in economic profit. The managers of Happy Cows are considering adding a second dairy farm; however, the managerial diseconomies from adding the second farm cause Happy Cows current farm's economic profit to fall to $15,000. It is economically sound for Happy Cows to add the second farm if ________.
A) the second farm's economic profit is at least $4,800 B) the second farm's economic profit is at least $4,000 C) the second farm's economic profit is less than $5,000 D) the second farm's economic profit exceeds $5,000
One of the characteristics of an oligopoly is
A) many sellers. B) easy entry. C) interdependence in decision making. D) the use of patents to protect market share.