The demand for home computers has increased, yet the price has fallen. Explain this apparent paradox
Supply has increased by more than demand has increased. The technological advance in computer chips has led to a huge increase in supply, more than enough to counteract any upward pressure on price due to the increase in demand.
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Whenever average cost is increasing, marginal cost must also be increasing.
Answer the following statement true (T) or false (F)
Which of the following statements is true?
A) The supply of oil is perfectly inelastic; therefore, as the demand for oil increases over time the price of oil increases significantly. B) The supply of oil is very inelastic over short time periods but becomes more elastic over time. A given shift in supply results in a smaller increase in the price of oil when the supply is more elastic. C) Over short periods of time increases in the demand for oil are greater than increases in the supply of oil. Over the long run increases in the demand and the supply of oil are about equal. As a result, the price of oil increases greatly in the short run but is stable in the long run. D) The supply of oil is very elastic over short time periods but becomes perfectly inelastic over time. A given shift in supply results in a greater increase in the price of oil when the supply of oil is perfectly inelastic.
Monetary expansion causes the current account balance to increase in the short run. Discuss. Is the same the case for fiscal expansion?
What will be an ideal response?
Under a system of barter
A) each individual trades output directly with another. B) only agricultural goods may be traded. C) goods may be traded for money, but money may not be traded for goods. D) currency is accepted for purchases, but personal checks are not.