Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur? (i) New firms will enter the market. (ii) In the short run, price will rise; in the long run, price will rise further. (iii) In the long run, all firms will be
producing at their efficient scale.
a. (i) and (ii) only
b. (i) and (iii) only
c. (ii) and (iii) only
d. (i), (ii) and (iii)
b
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The difference between economies of scale and economies of scope is:
a. economies of scale occur whenever inputs can be shared in the production of different products b. economies of scope occur whenever inputs can be shared in the production of different products c. economies of scale can occur when two or more products are produced d. economies of scope can occur when two or more products are produced e. both b and d
A decrease in the general price level is associated with an upward shift in the aggregate expenditures function
a. True b. False Indicate whether the statement is true or false
A decrease in the interest rate, other things being equal, causes a(n):
A. upward movement along the demand curve for money. B. downward movement along the demand curve for money. C. rightward shift of the demand curve for money. D. leftward shift of the demand curve for money.
Which of the following goods would see the largest decline in demand during a recession?
A) automobiles B) clothing C) food D) haircuts