Answer the following statement(s) true (T) or false (F)
1. In a competitive equilibrium, the industry's output is produced at the lowest possible cost because each firm has the goal of minimizing its cost.
2. Higher costs, whether fixed or variable, will cause a leftward shift in the industry's short-run supply curve.
3. The number of firms in an industry is fixed in the short run.
4. A new licensing fee would cause an immediate upward shift in an industry's short-run supply curve.
5. In a long-run competitive equilibrium, both more efficient and less efficient firms earn zero economic profit.
1. False
2. False
3. True
4. False
5. False
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Policies aimed at reducing the natural rate of unemployment are referred to as
a. stabilization policies. b. structural policies. c. macroeconomic policies. d. labor policies.
Which of the following is a series of rules that stops trading on an exchange for a relatively short period of time?
A. Program trading B. Market limits C. Stop orders D. Circuit breakers
If the costs of negotiating and enforcing contracts are _____ relative to the benefits, buyers and sellers have incentives to make economically efficient arrangements that _____ value
a. high; increase b. low; increase c. high, decrease d. low; decrease
Suppose that a sharp downturn in the price of a country's prime manufacturing product results in a terrible recession and a massive decline in the general income level of the citizens. Other things constant, what would be the recession's most probable effect on money demand in the country?
a. People will hold more money for any purpose, resulting in a decline in money demand. b. Local M1 money demand will rise. c. The transactions demand for money will fall such that the quantity of money demanded will be lower at any given interest rate level. d. The speculative demand for money will fall, causing a downward movement along the money demand curve. e. The precautionary demand for money will increase, causing an upward shift in the money demand curve.