Refer to the accompanying figure. Assume the market is originally at point W. Movement to point Z is a combination of:
A. an increase in supply and an increase in quantity demanded.
B. an increase in supply and an increase in demand.
C. a decrease in supply and an increase in quantity demanded.
D. an increase in demand and an increase in quantity supplied.
Answer: B
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In the 1980s, U.S. economists acknowledged that it was not possible to exploit the trade-off suggested by the Philips curve of the 1960s. This realization led to more stable macroeconomic policy, which in turn contributed to:
a. more volatility in real output. b. less volatility in real output. c. complete removal of unemployment. d. more volatility in the price level. e. short business cycles.
Which of the following is a normative statement?
a. The unemployment rate has decreased. b. Governments should hire anyone who cannot get a job. c. Governments in most developed countries provide unemployment benefits. d. The majority of union members work for the government.
Profit can be maximized only where marginal revenue equals
a. average cost. b. total cost. c. marginal cost. d. average cost.
As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will
A. shift to the left and become less elastic because there are now more substitutes for its product. B. not be affected because the new firms do not produce a perfect substitute for its product. C. shift to the left, but the elasticity of demand will not be affected. D. shift to the left and become more elastic because there are now more substitutes for its product.