Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y1.
C. P3 and Y1.
D. P3 and Y2.
Answer: D
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Which assumption is part of the model of monopolistic competition?
A. There are significant barriers to entry into the market. B. There is no collusion or mutual interdependence among firms. C. Firms make identical or homogeneous products. D. Firms have no control over their products' prices.
Refer to the above table. Suppose the demand for smartphones rises because more people use the Internet with a smartphone. The new equilibrium price will be
A) $200. B) $275. C) more than $275. D) impossible to be determined given the information.
An economic failure of an embargo is said to have occurred if
A. the prices of the embargoed goods do not decline in the imposing country. B. the price of the good exported by the imposing country to the target country rises substantially in the target country when the embargo is imposed. C. the target country suffers a greater welfare loss than does the imposing country. D. the embargo inflicts little damage on the target country but possibly a greater damage on the imposing country.
The real minimum wage was at its all-time high
A. shortly after the increase in 1992. B. at its inception in the 1930s. C. shortly after the increase in 1968. D. shortly after the increase in 1980.