Consider a perfectly competitive market. What do you expect to happen to the number of firms and firm profitability in the short run and long run if demand for the product falls?
What will be an ideal response?
In the short run, firms will earn negative profit. In the long run, some of these firms will exit the industry, lowering market supply, and raising the market price until remaining firms are earning zero economic profit.
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The upward slope of the supply curve reflects the
A. principle of specialization in production. B. fact that price and quantity supplied are inversely related. C. law of increasing substitution. D. principle of diminishing marginal productivity
The budget set defines the combinations of good X and Y that:
A. maximize the supplier's profit. B. maximize the consumer's utility. C. are desirable to the consumer. D. are affordable to the consumer.
A majority of states have a minimum wage that is higher than the federal minimum wage.
Answer the following statement true (T) or false (F)
Investment happens when:
A. Current income is greater than current spending B. Current consumption is greater than current output C. Resources are devoted toward increasing current output D. Resources are devoted toward increasing future output