In a purely competitive industry:
A. there will be no economic profits in either the short run or the long run.
B. economic profits may persist in the long run if consumer demand is strong and stable.
C. there may be economic profits in the short run but not in the long run.
D. there may be economic profits in the long run but not in the short run.
Answer: C
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A crucial national income accounting identity has (S + T) equal to
A) I + G - NX. B) I + G + F. C) I + NX. D) G + F. E) I + G + NX.
All things equal, the price elasticity of supply
a. will be greater in the short run than in the long run. b. will be greater in the long run than in the short run. c. is the same for the short run and the long run. d. approaches zero in the long run.
Hailey's income is $40 per week. She spends all of it on coffee (C) and doughnuts (D). Coffee costs $2 per cup and doughnuts cost $1 each. Her marginal rate of substitution for coffee with doughnuts is D/C. How many cups of coffee and how many doughnuts will she purchase each week?
A. 15 cups of coffee and 10 doughnuts B. 10 cups of coffee and 20 doughnuts C. 20 cups of coffee and 10 doughnuts D. 5 cups of coffee and 30 doughnuts
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.