If firms in competitive price-searcher markets are earning economic losses, what effect will the exit of existing firms have?
a. Demand for the product of each firm will be reduced until the losses are eliminated.
b. Demand for the product of each firm will increase until all firms earn zero profit.
c. Demand for the product of each firm will increase until price is greater than average total cost.
d. Demand for the product of each firm will fall until price equals marginal cost.
B
You might also like to view...
If there is an increase in the price of the final good that an industry produces, the labor demand curve in the industry is likely to:
A) shift to the left. B) shift to the right. C) become vertical. D) become horizontal.
Which of the following is the best way for a student of economics to make sensible judgments about real-world markets and real-world governments?
a. In the real world, government action is always the best way to control markets. b. We must see the strengths and weaknesses of both markets and government. c. Markets’ lack of flexibility must produce unwanted results, such as monopolies and worker oppression. d. Government action is imperfect and does not reflect majority views, so it has no useful role to play in regulating markets.
Which of the following is a component of high powered money?
A) bonds held by banks, loans, and bank reserves B) currency in circulation plus bank reserves C) currency in circulation plus checkable deposits D) bonds held by banks plus checkable deposits E) the sum of currency in circulation, bank reserves, and checkable deposits
The widespread decline in the volatility of many macroeconomic variables after 1984 led economists to term this period the
A. Steady State. B. Long Boom. C. Great Moderation. D. Low Volatility Era.