Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by
a. decreases in production costs resulting from more firms coming into the market.
b. a breakdown of the "free entry and exit" feature of competition.
c. a breakdown of the "price taking" feature of competition.
d. the fact that a resource used in the production of the good is available only in limited quantities.
d
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Suppose bicycles are produced by a competitive constant-cost industry, which is initially in a long-run equilibrium. For each of the following situations, design a supply-demand diagram that shows how market price and quantity will be affected in both the short run and the long run. In your diagrams, show the short-run supply, long-run supply, and demand curves, along with any shifts in these curves. Label the initial long-run equilibrium E0, the new short-run equilibrium E1, and the new long-run equilibrium E2.
(i) New health regulations require each bicycle firm to purchase an air purification system to reduce hazardous fumes in the workplace. Who pays for this increased cost in the short run? Who pays in the long run? (ii) The cost of titanium alloy rises, which adds $10 to the cost of manufacturing each bicycle frame. Who pays for this increased cost in the short run? Who pays in the long run? (iii) Bicycling declines in popularity as more and more people take up in-line skating. How are the profits of bicycle manufacturers affected in the short run? How are their profits affected in the long run?
Based on the above table, the labor force participation rate is
A) 71.4 percent. B) 82 percent. C) 53.6 percent. D) 75 percent. E) 64.3 percent.
The demand for bus service is perfectly elastic at a price of $1.25 a ride. The table above shows the bus company's marginal cost and the marginal social cost of the bus service
If the government levies a tax on bus rides so that the bus company takes into account the marginal social cost, the tax will be ________ a ride. A) $0.75 B) $1.60 C) $1.25 D) $3.25
Any activity that results in the conversion of resources into products that can be used in consumption is
A) planning. B) investment. C) production. D) discounting.