The textile industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will
a. shift the demand curve outward so that price will rise to the level of production cost.
b. cause the remaining firms to collude so that they can produce more efficiently.
c. cause the market supply to decline and the price of textiles to rise.
d. cause firms in the textile industry to suffer long-run economic losses.
c
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A decrease in inflationary expectations __________ interest rate
A) raises the natural B) raises the nominal C) lowers the natural D) lowers the nominal
In 2010, the co-chairmen of President Obama's deficit reduction commission proposed curtailing or eliminating the mortgage interest deduction that millions of homeowner taxpayers receive every year. Economists who favor the proposal would argue that (i) too much of the economy's capital stock is tied up in residential housing. (ii) too little of the economy's capital stock is invested in
corporate capital. (iii) the misallocation of resources results in lower productivity and reduced real wages. a. (i) only b. (ii) only c. (i) and (ii) only d. (i), (ii), and (iii)
Howard has just smoked a cigarette. If he chooses to smoke a second one:
A. he will derive less marginal utility from it than his first. B. he is not acting rationally. C. he will experience a drop in total utility. D. None of these is true.
New classical economists:
A. stress the importance of federal budget deficits in stimulating aggregate demand. B. hold that, left alone, the economy gravitates to its full-employment level of output. C. emphasize tax cuts as means of increasing aggregate supply. D. advocate active use of monetary policy to stabilize the economy.