Consider a perfectly competitive market in which the firms are earning above-normal profit in the short run. In the long run, forces will come into play to
a. decrease market supply
b. shift the horizontal demand curve facing each firm downward
c. increase the market price
d. encourage existing firms to increase output
e. decrease the number of sellers in the market
B
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The quantity of labor supplied depends on the
A) money wage rate not the real wage rate. B) real wage rate not the money wage rate. C) price of output not the money wage rate nor the real wage rate. D) level of profits.
In analyzing the decision to shut down in the short run we assume that the firm's fixed costs are
A) nonmonetary opportunity costs. B) sunk costs. C) implicit costs. D) capital costs.
When market conditions in a competitive industry are such that firms cannot cover their total production costs, then
a. the firms will suffer long-run economic losses. b. the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits. c. some firms will exit the market, causing prices to rise until the remaining firms can cover their total production costs. d. all firms will go out of business, since consumers will not pay prices that enable firms to cover their total production costs.
Why does exchange rate overshooting occur?
What will be an ideal response?