When expectations are rational, prices and wages are, on average, set at market-clearing levels.
Answer the following statement true (T) or false (F)
True
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If demand is unit-elastic, then a $5 decrease in price will lead to an increase in quantity demanded by 5 units
a. True b. False Indicate whether the statement is true or false
Figure 10.1 depicts a firm's marginal revenue product curve. If the product price decreases, the marginal revenue product curve:
A. shifts downward. B. shifts upward. C. remains the same. D. None of these
A sales tax imposed on sellers shifts the supply curve leftward for the taxed good because the
A) tax is paid by the seller to the government and is, therefore, like a cost of production. B) tax is actually shifted entirely onto the buyer who can afford only a smaller supply. C) higher price causes entry into the market. D) tax shifts the demand curve leftward.
After an increase in the demand for construction workers, the market will attain its new long-run equilibrium faster if
A) wages are flexible. B) wages are inflexible, forcing new people to enter the market. C) unions restrict the number of new construction workers. D) people ignore the shortage in the short run.