Although an improvement in technology enables perfectly competitive firms to earn a positive economic profit in the short run, entry by new firms will ensure that those profits are eliminated over time
Indicate whether the statement is true or false
TRUE
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Refer to Figure 12.2. Suppose the economy is initially above potential GDP, and the actual inflation rate is greater than the expected inflation rate. If the Fed wants to achieve the goal of price stability, this would be represented by a
A) shift from IS1 to IS2. B) shift from IS2 to IS1. C) shift from MP1 to MP2. D) shift from MP2 to MP1.
In the classical model
A) a decrease in aggregate demand will lead to a decrease in the price level and a decrease in real GDP. B) changes in aggregate supply leave real GDP unchanged. C) a decrease in aggregate demand will lead to an increase in the price level and a decrease in real GDP. D) changes in aggregate demand affect only the price level, not real GDP.
The word "efficient" in the term "efficient markets hypothesis" refers to the idea that
a. fundamental analysis is an efficient way to go about choosing which stocks to buy or sell. b. stock prices move upward and downward "efficiently," rather than following a "random walk.". c. the stock market is "informationally efficient.". d. companies employ officers and managers who are well-qualified to perform their jobs.
Consumer surplus in a market for a product would be equal to ________ if the market price was zero
A) zero
B) the area under the demand curve
C) the area between the supply curve and the demand curve
D) the area above the supply curve