How will the invisible hand move corn prices in response to:
a. a flood that destroys a great deal of the corn crop?
b. a rise in the price of wheat (a substitute for corn)?
c. a change in consumer tastes away from corn dogs toward hot dogs?
d. an increase in the number of people with access to the corn market?
a. Since a great deal of the corn crop has been destroyed by the flood, the supply curve for corn will shift leftwards and the price of corn will increase.
b. When the price of a substitute such as wheat increases, the demand for corn will increase. The demand curve will shift rightwards and the price of corn will increase.
c. Corn (not surprisingly) is an important input in the production of corn dogs. If consumers prefer fewer corn dogs, the demand curve for corn will shift leftwards and the price of corn will fall.
d. As more buyers enter the market, the demand for corn will increase. The demand curve will shift rightwards and the price of corn will increase.
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Which of the following is not a supply-side measure?
a) Increased training b) Providing more information c) Helping individuals to move location to find work d) Increasing spending on existing industries
Monopolistically competitive firms can earn profits in the long run by:
A. monopolistically competitive firms only earn zero profits in the long run. B. continually innovating to differentiate their product. C. price discriminating. D. further minimizing their costs.
Which of the following is NOT a characteristic of a perfectly competitive market?
A. Each firm in the market sells a somewhat different variant of the good. B. There are many sellers, each of which sells only a small fraction of the total quantity exchanged. C. Sellers can easily buy and sell the productive resources needed to enter the market. D. Buyers and sellers are well-informed.
When aggregate demand shifts because of expansionary fiscal policy, then the impact of the fiscal policy for:
A. increasing GDP will be weakened if crowding out occurs. B. decreasing GDP will be strengthened if crowding out occurs. C. increasing GDP will be weakened by an increase in the price level. D. increasing GDP will be strengthened by the decrease in the price level.