What is the relationship between the long-run industry supply curve and the short-run supply curve in a perfectly competitive market?
The long-run industry supply curve evolves from the short-run supply curve. As new firms enter, the short-run supply curve shifts toward its long-run position. Also, as short-run fixed cost commitments become variable, the short-run cost curves become the long-run cost curve.
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A monopolist maximizes total revenue
a. True b. False Indicate whether the statement is true or false
The idea that if governments cut taxes but not spending, people will not change their behavior, and expansionary policy will have little expansionary effect is known as:
A. Keynesian policy. B. Ricardian equivalence. C. the invisible hand. D. Stimulus policy.
The U.S. dollar exchange rate, e, expressed as Japanese yen per U.S. dollar, will depreciate when:
A. real GDP in Japan increases. B. the U.S. Federal Reserve tightens monetary policy. C. real GDP in Japan decreases. D. U.S. consumers decrease their preference for Japanese cars.
Comparative advantage has mixed results when it comes to predicting a country's trade patterns. Which of the following is FALSE?
A) There are many potential products an economy might export that use the same comparative advantage. B) A large share of international trade is not based on comparative advantage. C) Comparative advantage has proven completely incapable of predicting trade. D) Comparative advantage is a dynamic concept, which means that the spread of technology, improvement in skills, and learning-by-doing may alter a country's comparative advantage over time.