In a competitive industry buffeted by demand and supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return
b. Positive earnings
c. Mean reversion
d. None of the above
c
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Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be
A) 183.49. B) 236. C) 237.62. D) 239.24.
Last year a firm made 1,000 units of its product available at a price of $5 per unit. This year the firm will still make 1,000 units available, but only if the price is $7 per unit. What is most likely to have happened?
a. Supply has increased b. Supply has decreased c. Demand has decreased d. Quantity demanded has increased e. Quantity supplied has increased
The actual burden of a tax is determined primarily by
a. the elasticities of demand and supply. b. the legal (or statutory) assignment of the tax. c. the number of exchanges that are eliminated from the market as a result of the tax. d. none of the above.
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher