Assume the tennis ball industry, a perfectly competitive, increasing?cost industry, is in long-run equilibrium with a market price of $5. If the demand for tennis balls decreases, long-run equilibrium will be reestablished at a price
A. equal to $5.
B. less than $5.
C. greater than $5.
D. either greater than or less than $5, depending on the number of firms that enter the industry.
Answer: B
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Improving the education level of the labor force will
A. shift the production possibilities curve inward. B. not shift the production possibilities curve since the total size of the labor force has not been changed. C. shift the production possibilities curve outward. D. cause a movement from a point inside the production possibilities curve to a point on the curve.
Refer to Figure 13.2. The technical name given to Alice, based on her position in the figure, is the
A) election moderator. B) median voter. C) irrelevant alternative. D) strategic voter.
Opportunity cost can best be defined as
A) the interest cost of financing a business loan at the bank. B) the value of all of the alternatives sacrificed. C) the value of the next-highest-ranked alternative. D) There is no real definition for opportunity cost.
Specialization in trade will be economically efficient if it is based upon
A) national security needs. B) absolute advantage. C) comparative advantage. D) government regulations.