The demand curve for the perfectly competitive industry normally slopes downward, unlike the perfect competitive firm. Why?
Each firm by itself is so small that if it alone were to double its output, the effect would hardly be noticeable. But if every firm in the industry were to expand its output, that would make a substantial difference. Customers can be induced to buy the additional quantities arriving at the market only if the price of the good falls.
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
If ______ equilibrium output _______, the price level rises.
a) actual; is below potential GDP b) potential; is equal to actual GDP c) potential; exceeds actual GDP d) actual; exceeds potential GDP
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A. B to A. B. C to D. C. B to D. D. A to C.
A monopolistically competitive industry that earns economic profits in the short run will
A) continue to earn economic profits in the long run. B) experience the entry of new rival firms into the industry in the long run. C) experience the exit of existing firms out of the industry in the long run. D) experience a rise in demand in the long run.