Assume the development of a new technology that allows widgets to be produced for less. Also, assume that widgets are a key input in the production of whatchamacallits. As a result of this new technology, what would an economist expect to happen in the market for whatchamacallits?
a. the demand curve will shift to the left
b. the supply curve will shift to the left
c. the demand curve will shift to the right
d. the supply curve will shift to the right
e. none of the above
Answer: d. the supply curve will shift to the right
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A supply shock jolts the economy from one Phillips curve to another
Indicate whether the statement is true or false
Which of the following statements is true?
a. Monopoly results in smaller output and a higher price than would be the case under perfect competition. b. The monopolist produces at an output where P > MC and the marginal value to society of the last unit produced is greater than its marginal cost. c. The monopoly is not producing enough output from society's standpoint. d. Monopoly may lead to greater concentration of economic power and could retard innovation. e. All of these statements are true.
Refer to the accompanying figure. If Pat and Chris each spend half their time on each task, then:
A. the outcome will be efficient. B. they will plant fewer bulbs and remove fewer bags of trash than if they each had specialized in the task at which they have a comparative advantage. C. they will plant more bulbs and remove fewer bags of trash than if they had each specialized in the task at which they have a comparative advantage. D. the outcome will be unattainable.
One way that the government encourages the production of a good with positive externalities is to offer
A. an effluent fee. B. a subsidy. C. a market to pollute. D. a pollution tax.