A sudden fall in the market demand in a competitive industry leads to
a. A short run market equilibrium price lower than the original equilibrium
b. A market equilibrium price lower than the short run price
c. New firms entering the market
d. All of the above
a
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Answer the next question using the following budget information for a hypothetical economy. All data are in billions of dollars. Also assume that all budget surpluses are used to pay down the public debt. Government SpendingTax RevenuesGDPYear 1$800$825$4,000Year 28508504,200Year 39008754,350Year 49509004,500Year 51,0009254,600Assume that year 1 is the first year for this economy and year 3 is the current year. What is the public debt in this economy at year 3?
A. $75 billion B. $50 billion C. $25 billion D. $0 billion
Examine the accuracy of the following statement: "Given that burgers and fries are complementary goods, if the price of fries increases the demand for both goods will fall."
What will be an ideal response?
If the price of a cola increased by 10% and consumers responded by purchasing 20% less cola, the absolute value of price elasticity of demand for cola would be
A. 1.2. B. 0.20. C. 0.5. D. 2.
Which of the following is NOT an advantage of a partnership?
A. separation of partner's duties B. the taxation of profits C. the issue of liability D. specialization of individuals