In the late 1970s and 1980s a movement toward deregulation took place because
A. the regulated industries became more competitive with rapidly advancing technology.
B. regulation was leading to higher production costs, which caused widespread dissatisfaction.
C. the transportation and telecommunication industries experienced the exit of many firms, which reduced the need for regulation.
D. Congress decided the regulations that had been in place were not effective anyway.
Answer: B
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If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?
A) go to work in the next-best earning opportunity B) shut down, with a loss equal to total fixed cost C) continue at the current output, making zero economic profit D) increase production in order to make an economic profit E) remain open but decrease production in order to make an economic profit
Which of the following would help explain why the aggregate demand curve slopes downward?
a. An unexpectedly low price level raises the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services. b. A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports. c. A higher price level increases real wealth, which stimulates spending on consumption. d. A lower price level reduces the interest rate, which encourages greater spending on investment goods.
In the first graph below, illustrate the cost curves and demand conditions for a monopolistic ally competitive firm making short-run profits. In the second graph, illustrate what those conditions are most likely to be in the long run. Explain the major
differences in the two graphs. What will be an ideal response?
An increase in demand and a decrease in supply will lead to an
A. unambiguous increases in both price and quantity. B. unambiguous decreases in both price and quantity. C. an unambiguous increase in quantity, but the effect on price is indeterminate. D. an unambiguous increase in price, but the effect on quantity is indeterminate.