Explain how the market supply curve is derived in a perfectly competitive market. Identify five factors that would cause the market supply curve to shift.
What will be an ideal response?
The market supply curve is the sum of the marginal costs curves (above the AVC) of all the individual firms in the market. Shifts in the market supply curve can be caused by changes in (1) the price of factor inputs; (2) technology; (3) expectations; (4) taxes and subsidies; and (5) the number of firms in the industry.
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Dilbert's Incorporated produced 5,000,000 units of accounting software in 2010 . At the start of 2011 the pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000 . These numbers indicate that productivity
a. fell by 4%. b. fell by 20%. c. rose by 12%. d. rose by 20%.
Which set of events would most likely decrease aggregate demand?
A. An increase in personal income tax rates. B. A reduction in the excess capital of the existing capital stock. C. A reduction in business and personal tax rates. D. An increase in investment spending.
In an open economy, the quantity supplied of TVs in the domestic market will be ________.
A. 30,000 B. 60,000 C. 120,000 D. 90,000
One characteristic of a Giffen good is that it
A) is a luxury good. B) is an inferior good. C) has an upward-sloping Engel curve. D) All of the above.