A perfectly competitive industry is in long-run equilibrium. If demand for the product decreases, we can expect the price of the good to:
A. rise at first and then fall.
B. fall at first and then rise.
C. rise and remain at the higher price.
D. fall and remain at the lower price.
Answer: B
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Refer to Figure 10.1. If the level of real GDP is initially Y2, firms will ________ production until equilibrium is reached at ________
A) increase; Y2 B) decrease; Y2 C) increase; Y1 D) decrease; Y1
Studies of income mobility show
a. many lower-income households remain in the lowest quintile over time. b. a welfare trap exists over time. c. many of the lower-income households climb to middle-income and even to upper-income classes over time. d. those in the highest-income quintile stay there permanently.
A 2009 Chevrolet model has more horsepower than the 2008 version and is included in the BLS basket of goods. BLS attempts to account for this change in the market basket by
a. dropping the good from the basket. b. substituting in a different vehicle with the same horsepower as the 2008 model. c. adjusting the share of the market basket allocated to transportation. d. adjusting the price of the good to account for the quality change.
Expansionary monetary policy _______________ Real GDP ______________ in an open economy than in a closed economy
A) raises; more B) raises; less C) lowers; more D) lowers; less