Suppose that the demand for oranges increases. Explain the long-run effects of the guiding function of price in this scenario
What will be an ideal response?
In the long run, the higher price of oranges will signal more firms to enter the orange market, as it will seem more profitable than some other markets. As firms enter, supply increases, causing the price to fall relative to the short-run price and quantity to increase further. The higher short-run price has guided more resources into the market.
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Based on this figure, if an exchange rate of $0.09 dollars per Norwegian krone is maintained, the Norwegian government will gain (in dollar) ________ worth of international reserves per period. 
A. 495 B. 5,500 C. 220 D. 605
When the price of a movie ticket falls from $14 to $10, the quantity of tickets demanded increases from 500 to 700 a day. What is the price elasticity of demand for movie tickets? (Use the midpoint method.)
What will be an ideal response?
The experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s indicates that firms and workers
A) had adaptive expectations. B) had rational expectations and that they trusted Fed announcements. C) preferred high unemployment to high inflation. D) Both A and B are correct answers.
The demand for labor is considered a derived demand since it depends on
A) the supply of labor. B) the market for capital. C) the consumer demand for the output produced. D) competitive markets.