Distinguish the laws of demand and supply. How are the laws of demand and supply illustrated graphically?
What will be an ideal response?
The law of demand states that there is an inverse relationship between the price and the quantity demanded. The law of supply demands that there is a direct relationship between the price and the quantity supplied. The demand curve is downward sloping while the supply curve is upward sloping.?
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Barriers to entry are forces that:
A. promote a more efficient allocation of resources across the economy. B. limit the government from intervening in markets. C. limit consumers from purchasing new products. D. limit new firms from joining an industry.
Explain what is meant by the term ceteris paribus. Why is this concept often used in economic models?
What will be an ideal response?
When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a
a. resource industry. b. exclusive industry. c. government monopoly. d. natural monopoly.
Most economists believe that money neutrality
a. does not hold in the short run. b. does not hold in the long run. c. does not hold in either the short run or long run. d. holds in the short run and the long run.