After Hurricane Katrina, the supply curve for oil shifted to the left, and as a result
A. gas prices remained at the equilibrium price.
B. there was a corresponding shift of the demand curve.
C. a new equilibrium price was reached.
D. the equilibrium point moved along the supply curve.
Answer: C
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If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied
A) the elasticity of supply equals 0.43. B) the elasticity of supply equals 2.33. C) income elasticity equals 2.33. D) supply is inelastic.
For a monopolistic competitive firm, which of the following is TRUE in the long run?
A) ATC is minimized. B) Economic profit is zero. C) P = MC. D) all of the above
The expression, "There's no such thing as free lunch" implies that
What will be an ideal response?
Which of the following is the best example of an action that imposes an external cost?
A. Wear and tear on your car as the result of frequent use. B. Deterioration in the average quality of a house you own as the result of poor maintenance. C. Water pollution from an upstream factory that increases the cost of providing clean water to downstream residents. D. A rose garden on your property from which your neighbor gets much enjoyment.