Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease?
A) a technological advancement that results in a bumper crop of potatoes
B) a freeze that sharply reduces potato output
C) a decrease in consumer income
D) an increase in consumer income
D
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
A contractionary monetary policy ________.
A. shifts the aggregate supply curve to the left B. is used when the inflation rate is high C. is designed to increase aggregate demand D. can reduce the length of a recession
Most local phone companies
a. face a horizontal demand curve b. are regulated c. are called public utilities d. have tremendous economies of scale e. are natural monopolies
A market is NOT contestable if:
A. existing firms cannot respond quickly to entry by lowering their price. B. there are sunk costs. C. consumers respond quickly to a price change. D. all producers have access to the same technology.