Jennifer trades her autographed picture of Hulk Hogan for Alyssa's autographed picture of Pee-wee Herman, and both are happy with the exchange. This is an example of
A. Pareto optimality.
B. general equilibrium.
C. partial equilibrium.
D. voluntary exchange.
Answer: D
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If cyclical unemployment is negative, then
A) the actual unemployment rate is below the natural rate of unemployment. B) the natural rate of unemployment is getting smaller. C) there have been some errors in classifying the type of unemployment experienced by some people. D) structural unemployment must be increasing.
A privately owned monopoly will NEVER produce along a range of output for which
A) the demand curve is elastic. B) the demand curve is inelastic. C) the price elasticity of demand is greater than 1. D) the price elasticity of supply is greater than 1.
Assume that a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases. Which of the following statements is not correct?
a. Existing firms will earn economic profits in the new long-run equilibrium b. Existing firms will increase output in the short run c. New firms will enter the industry in the long run d. Some resource suppliers to the industry will earn higher income e. The new long-run equilibrium price will exceed the original equilibrium price
Assume a perfectly competitive firm sells its output for $150 per unit. It currently produces 6,000 units of output, at which output level it minimizes its average variable cost at $152 per unit. Assuming it wants to maximize its profits, it should: a. increase output
b. decrease output, but not shut down. c. maintain its current output rate. d. shut down.