The sticky-price theory implies that
a. the short-run aggregate-supply curve is upward-sloping.
b. an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce.
c. menu costs influence the speed of adjustment of prices.
d. All of the above are correct.
d
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As Sam moves rightward along his indifference curve, his marginal rate of substitution
A) is diminishing. B) is increasing. C) remains constant. D) shows the change in his income.
If the private sector anticipates higher future taxes as a result of a current budget deficit, current autonomous saving will decline
a. True b. False Indicate whether the statement is true or false
Coal and iron ore are complements in the manufacture of steel. An increase in the price of coal would lead to
A. no change in the demand for iron ore since the steel makers must use both iron ore and coal if they are to make steel. B. an increase in the demand for iron ore as producers substitute more iron ore for coal in the production process. C. an increase in the supply of iron ore as iron ore producers see an opportunity to expand their markets. D. a decrease in the demand for iron ore as steel manufacturers reduce production of steel.
What happens to the profit-maximizing cartel price and quantity if the marginal cost of production declines?
A) The sellers are no longer price takers, so the change in marginal cost has no impact on the cartel outcome. B) If demand is downward sloping, the optimal cartel price should decline and the market quantity should increase. C) The sellers retain the same pricing strategy and capture higher per-unit profits. D) The cartel price increases and market quantity declines.