What is a constant-cost industry? What does the long-run industry supply curve look like for a constant-cost industry?
What will be an ideal response?
A constant-cost industry is an industry that has no external economies or diseconomies of scale. In this case, the long-run industry supply curve will be horizontal. This occurs because the firms' long-run average cost curves are unaffected by a change in the size of the industry. Therefore minimum long-run average cost is unaffected and the price will be constant.
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The money supply in Macroland is currently 2,500, bank reserves are 200, currency held by public is 500, and banks' desired reserve/deposit ratio is 0.10. Assuming the values of the currency held by the public and the desired reserve/deposit ratio do not change, if the Central Bank of Macroland wishes to increase the money supply to 3,000, then it should conduct an open-market ________ government bonds.
A. sale of 500 B. purchase of 250 C. purchase of 50 D. sale of 50
The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The price of cotton in Georgestan is
A) 30 cents per pound. B) 40 cents per pound. C) 60 cents per pound. D) 50 cents per pound.
In the base year, the GDP deflator is always
a. -1. b. 0. c. 1. d. 100.
Which of the following is not a characteristic of monopolistic competition?
A) There are many buyers and sellers. B) There are low barriers to entry. C) Average revenue is equal to price. D) The products sold by all firms are identical.