If an industry has constant marginal and average costs, any shift in demand will eventually
A) result in a higher equilibrium price.
B) be met by a smaller change in quantity supplied.
C) be met by an equal change in quantity supplied, and equilibrium price will not change.
D) make economic profits zero in the short run.
Answer: C
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If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign), then a 50 percent increase in the price of smart watches will lead to
A. the sale of 200 additional smart watches. B. the sale of 125 percent fewer smart watches than before. C. the sale of 70 percent fewer smart watches than before. D. the sale of 25 percent fewer smart watches than before.
Deficits financed by borrowed money lead to inflation, and in a fixed or crawling peg exchange rate system, this leads to the real exchange rate being undervalued
Indicate whether the statement is true or false
If a firm is experiencing diminishing marginal returns,
a. total output decreases as all resources are increased b. total output decreases as all resources are decreased c. total output decreases as one variable resource is increased, other things constant d. additional increments of output diminish as one variable resource is increased, other things constant e. additional increments of output diminish as all variable resources are increased
Many economists think that, in the long run, the economy tends to move toward
A. the natural or full-employment rate of unemployment. B. the natural or full-employment rate of inflation. C. a severe slump with high unemployment. D. an accelerating rate of inflation.