Suppose that the price of macaroni rises. Quantity supplied will ________ and producer surplus will ________.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
Answer: A
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One advantage of a consumption tax is that there are fewer problems with inflation.
A. True B. False C. Uncertain
If the income elasticity of money demand is 3/4 and income increases 8%, by about how much does the price level change?
A) Falls by 6% B) Unchanged C) Rises by 6% D) Rises by 8%
What happens in a perfectly competitive industry when economic profit is greater than zero?
A) Existing firms may get larger. B) New firms may enter the industry. C) Firms may move along their LRAC curves to new outputs. D) There may be pressure on prices to fall. E) All of the above may occur.
The steeper the slope of the aggregate supply curve in the long run indicates that an increase in aggregate demand will cause an increase in the price level and an even greater increase in output in the long run
a. True b. False Indicate whether the statement is true or false