Refer to the graphs shown, which depict a perfectly competitive market and firm in a constant-cost industry. If market demand decreases from D0 to D1, in the long run:
A. some firms will exit this market and the price will return to P0.
B. new firms will enter this market and the price will remain at P1.
C. new firms will enter this market and the price will return to P0.
D. some firms will exit this market and the price will remain at P1.
Answer: A
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Suppose that the country of Libraria made a concerted effort to increase the educational level of its people. If this effort had no effect on the wages of its workers, one might consider this as evidence in support of
a. the human-capital view of education. b. the signaling view of education. c. both the human-capital and the signaling view of education. d. neither the human-capital nor the signaling view of education.
The substitution effect causes a consumer to buy less of a product when the price increases because the
A. product is now less expensive compared to similar products B. product is now more expensive compared to similar products C. consumer's real income has decreased D. Consumer's real income has increased E.. consumer will buy more inferior goods and fewer normal goods
All of the following affect the demand for labor by a firm except
A. the amount of labor that will be supplied at different wages. B. the level of demand for the firm's products. C. the marginal physical product of the labor. D. the marginal revenue the firm receives for its products.
According to Keynesian theory, a decrease in government expenditures would be a proper fiscal policy during
A. an inflationary gap. B. a recessionary gap. C. a natural disaster. D. none of these.