If supply is perfectly inelastic and demand increases,
a. price falls and output rises.
b. price rises and output falls.
c. price rises and output remains unchanged.
d. price rises and output rises.
c. price rises and output remains unchanged.
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According to an article the Wall Street Journal, "The big car makers are pushing a wide
array of new technology into production, responding to relentless competitive pressure, rising energy prices and consumer demand for better safety. Source: Joseph B. White, "Ford, GM Eye Shift in Buying Habits," Wall Street Journal, May 22, 2006. Which of Porter's competitive forces does this statement allude to? A) competition from foreign auto manufacturers B) competition from substitute products from outside the industry C) competition from existing firms within the industry D) the threat of competition from new entrants
Many economists maintain that
a. the aggregate supply curve is nearly horizontal at low levels of real GDP. b. the aggregate supply curve is nearly vertical at very high levels of real GDP. c. any change in aggregate demand will have most of its effect on output when economic activity is low but on prices when the economy is near full employment. d. All of the above are correct.
(Figure: Long-Run Aggregate Supply Curves) Which of the following can explain the shift of the long-run aggregate supply curve from A to B in the figure?
What will be an ideal response?
Which of the following problems will most likely occur with a system of flexible exchange rates?
A. Macroeconomic instability as exports and imports fluctuate with the exchange rates. B. Government favoritism toward selected importers of goods and services. C. The emergence of black markets for foreign currency. D. Distortions in trade patterns away from the pattern suggested by comparative advantage.