A new technology is developed for producing solar panels that reduces production costs by 40%. Which of the following is true?
A. For the economy to remain efficient, product produced with this new technology must be equitably distributed to all consumers.
B. This new technology will affect efficiency, and will change the equilibrium price and quantity for this industry.
C. Firms will continue to operate efficiently as long as no firm adopts this new technology.
D. If firms do not adopt this new technology, then the economy will remain in general equilibrium, because firms will not change their price and output decisions.
Answer: B
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An above full-employment equilibrium is
A) a theoretical possibility but cannot happen in reality. B) the equilibrium in which the economy is in most of the time. C) when real GDP exceeds potential GDP. D) the period of time when prices are falling.
What does it mean for a money market mutual fund to "break the buck"?
A) The value of its share declines below $1. B) It incurs losses on its investments. C) It increases its fees to more than 1% of net asset value. D) It is unable to meet the demand for withdrawals by investors.
The price of a gallon of gasoline at the pump increased by 10 percent at the same time that the inflation rate was 5 percent. The nominal price of gasoline ________, and the real price of gasoline ________.
A. increased; decreased B. increased; did not change C. increased; increased D. decreased; increased
Assuming demand is a straight line, the equation of the inverse demand curve is represented as
A. Qd = a + bP. B. P - Qd = a + b. C. Q = a - bPd. D. P = a - bQd.