Which is the best example of the law of supply?
a. A milling company builds a new factory to process flour to export.
b. A catering company buys a new dishwasher to make their work easier.
c. A food producer increases the number of acres of wheat he grows to supply a milling company.
d. A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
Answer: d. A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
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The important characteristic of normative statements is that they
A) explain what really exists. B) are based on somebody's values and cannot be tested. C) explain what normally happens in the real world. D) help guide us to what will normally occur if some economic variable changes its value. E) do not use the ceteris paribus assumption.
If the dollar depreciates relative to the Swiss franc
A) Swiss chocolate will become cheaper in the United States. B) American computers will become more expensive in Switzerland. C) Swiss chocolate will become more expensive in the United States. D) Swiss computers will become cheaper in the United States.
If firms in a monopolistically competitive industry experience short-run losses
A) some firms would like to exit the industry but find they cannot. B) firms increase prices further, until they make at least a normal return. C) firms increase advertising spending to increase demand, until they make at least a normal return. D) some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit.
If the short-run Phillips curve has a very flat slope, the
a. structural deficit will grow during inflation. b. structural deficit will fall during recession. c. inflation costs of reducing unemployment are relatively low. d. inflation costs of reducing unemployment are relatively high.