When an economy is experiencing a negative output gap, there is:
A. inflationary pressure due to low demand.
B. significant inflationary pressure due to low demand.
C. inflationary pressure due to high demand.
D. significant inflationary pressure due to high demand.
Answer: A
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For a single-price monopoly, price is
A) greater than marginal revenue. B) one half of marginal revenue. C) equal to marginal revenue. D) unrelated to marginal revenue. E) always less than average total cost when the firm maximizes its profit.
The above figure shows the demand and cost curves for a firm in monopolistic competition in the long run. The firm maximizes its profit by
A) producing 4 units and charging a price of $15. B) producing 8 units and charging a price of $5. C) producing 16 units and charging a price of $10. D) None of the above answers is correct.
When demand is elastic: a. price elasticity of demand is greater than one
b. consumers are relatively responsive to changes in price. c. the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price. d. all of the above are correct.
Suppose bad weather in Florida unexpectedly results in a much smaller citrus crop than had been projected. The reduction in the supply of Florida citrus fruit would tend to
A) shift the supply curve for Florida citrus fruit down and to the right. B) increase the price of Florida citrus fruit. C) increase the supply of California citrus fruit. D) decrease the price of California citrus fruit.