A perfectly competitive industry is in long-run equilibrium. If demand for the product decreases, we can expect:
A. firms to enter the market.
B. firms to exit the market.
C. no change in the number of firms in the market.
D. There is not enough information to tell what will happen to the number of firms in the market.
Answer: B
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Refer to the figure above. When the supply curve of flash drives is S2 and the demand curve of flash drives is D, what is the surplus in the market when the price is $7?
A) 0 units B) 10 units C) 20 units D) 40 units
Which of the following is possible when the market fails?
A. It is impossible for government intervention to improve the mix of goods and services. B. The mix of goods and services is at the correct point on the production possibilities curve. C. The mix of goods and services is the optimal mix. D. The mix of goods and services is on the production possibilities curve.
Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 300 lattes were consumed. What might have caused this change?
A. The price of tea (a substitute for cafe lattes) fell. B. The price of tea (a substitute for cafe lattes) rose. C. The price of coffee beans (an input of production of cafe lattes) rose. D. The price of coffee beans (an input of production of cafe lattes) fell.
Financial investment refers to:
A. The same idea as economic investment B. Earning profits from producing goods and services C. Purchasing or building an asset for monetary gain D. Making new additions to the capital stock