Refer to Figure 14.1. Assume that the economy is originally in equilibrium where real GDP equals potential GDP
Other things equal, an increase in the target inflation rate would best be represented as a movement from ________ in the short run and ________ in the long run. A) point Y to point X; point X to point Y
B) point Y to point X; will remain at point X
C) point Y to point Z; remain at point Z
D) point Z to point X; point X to point Z
B
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One might argue that French chefs understand the law of diminishing marginal utility better than American chefs because
a. French chefs are able to price their meals higher than American chefs b. the French serve many courses of small portions, keeping the marginal utility of each one high c. the French focus on large portions and unlimited trips to the salad bar, keeping total utility high d. the only way to get people to eat American cuisine is to keep prices very low, suggesting a low marginal utility e. the waiters in French restaurants are instructed to help customers to equate the MU/P among different menu items by carefully explaining the various choices
In the long run, firms in a perfectly competitive market choose to produce a quantity:
A. that does not cover minimum average variable costs. B. where marginal costs are less than average variable costs. C. that earns zero economic profits. D. where ATC and AVC are at their minimum values.
Some economists argue that free trade is beneficial regardless of the actions of a country's trading partners, including trading partners that heavily protect their home markets
Indicate whether the statement is true or false
Why is the demand curve horizontal for a perfectly competitive firm?
What will be an ideal response?