If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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The "value of money"
A) increases during economic expansions. B) is the quantity of goods and services that a unit of money can buy. C) is determined by Fed regulations. D) is directly related to the price level. E) increases during inflationary periods.
When a brand name drug’s patent protection expires, many generic producers are usually ready to enter the market. These firms’ products are close substitutes, they have similar production technologies, the regulatory hurdles to enter are not so great, and, within a few months, there are plenty of rivals. What would you predict for the profitability during these first few months after generic drug entry?
What will be an ideal response
A firm that is a price taker can:
A. substantially change the market price of its product by changing its level of production. B. sell all of its output at the market price. C. sell some of its output at a price higher than the market price. D. decide what price to charge for its product.
Under pure monopoly, a profit-maximizing firm will produce:
A. in the inelastic range of its demand curve. B. in the elastic range of its demand curve. C. only where marginal revenue is zero. D. only where total costs are zero.