Corn is produced in a perfectly competitive market. The demand for ethanol increases. This will cause the individual corn farmer's marginal revenue to ________ and their profit-maximizing level of output to ________.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
Answer: A
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Suppose that a price ceiling is imposed because the market equilibrium is perceived to be too high. Which of the following rationing schemes makes no sense?
a. rationing fish to those willing to pay the highest price b. rationing fish by means of a lottery c. rationing fish to the elderly first d. rationing fish on a first-come, first-served basis e. rationing fish according to family size
During the Great Depression of the 1930s, the aggregate demand curve intersected the aggregate supply curve on
a. the horizontal segment of the aggregate supply curve b. the upward-sloping segment of the aggregate supply curve c. the vertical segment of the aggregate supply curve d. both the horizontal and vertical segments e. both the upward-sloping and vertical segments
If the economy is simultaneously in long-run and short-run equilibrium, which of the following is true?
a. Aggregate quantity supplied is greater than potential output. b. Aggregate quantity demanded is less than potential output. c. Aggregate quantity demanded is equal to potential output. d. The aggregate demand curve is horizontal at the potential output level.
Advertising is used by firms in a monopolistic competitive industry to
A. increase brand loyalty. B. differentiate their product from those of competitors. C. increase demands for their individual products. D. all of these.