Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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The marginal revenue product curve of a factor is negatively sloped because:
a. the additional revenue generated from an additional unit of a factor remains constant as more resources are hired. b. the additional revenue generated from an additional unit of a factor declines as more resources are hired. c. the additional revenue generated from an additional unit of a factor usually becomes zero as more resources are hired. d. the additional revenue generated from an additional unit of a factor increases as more resources are hired. e. the additional revenue generated from an additional unit of a factor doubles every time new resources are hired.
The most common provider of public goods is the private sector.
Indicate whether the statement is true or false.
All firms in a perfect competition industry
A. produce identical products. B. lose money. C. produce differentiated products. D. are price makers.
Suppose you are very picky about your outdoor BBQ experiences --- and you need exactly 1 cup of lighter fluid for each bag of charcoal you use. If you have either leftover charcoal or leftover lighter fluid, you simply discard it. a. With cups of lighter fluid on the horizontal and bags of charcoal on the vertical axis, illustrate some of your indifference curves. b. Suppose that your favorite charcoal has just gotten better because the producer has infused the charcoal with half a cup of lighter fluid per bag. How does your answer to (a) change? c. How could you change the units in which lighter fluid is measured on the horizontal axis to get your graph from (b) to look the same as you original graph in (a)?
What will be an ideal response?