Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y2.
C. P3 and Y1.
D. P2 and Y3.
Answer: D
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A firm in a monopolistically competitive market makes no economic profit in the long run because
A. long-run marginal cost will be too high to make any economic profit. B. long-run price will be equal to long-run marginal cost. C. long-run marginal cost will be equal to long-run marginal revenue. D. long-run price will be equal to long-run average cost.
An example of a price ceiling would be:
A. a ration coupon. B. a guarantee of a target price for farm products. C. parity pricing. D. rent control.
An objective analysis of "what is" in the economy is referred to as
A) positive economics. B) normative economics. C) command economics. D) implicit economics.
Blanca has her choice of either a certain income of $20,000 or a gamble with a 0.5 probability of $10,000 and a 0.5 probability of $30,000. The expected value of the gamble:
A) is less than $20,000. B) is $20,000. C) is greater than $20,000. D) cannot be determined with the information provided.