Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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An increase in the demand for a product will cause
a. both the demand for and prices of the resources used to produce the product to decline. b. both the demand for and prices of the resources used to produce the product to increase. c. the demand for the resources used to produce the product to increase and their prices to decline. d. the demand for the resources used to produce the product to decline and their prices to increase.
Based on the table for total, marginal, and average revenue, if the firm sells at a whole dollar unit price below $3, the marginal revenue is ______.
a. optimal
b. zero
c. negative
d. positive
An industry in which a few firms make almost all of the market sales is called:
A. a monopsony. B. a monopoly. C. an oligopoly. D. a perfectly competitive market.
Applied to perfectly competitive labor markets, the marginal principle tells firms to hire workers until:
A. the marginal revenue product of the last worker hired equals the wage. B. marginal productivity begins to diminish. C. average total costs are minimized. D. the price of the product equals the wage of the worker.