Why are sellers willing to sell more at a higher price?
What will be an ideal response?
Only at higher price will it be profitable for sellers to incur the higher opportunity cost associated with producing and supplying a larger quantity. Principle of increasing cost suggests that if more resources are devoted for the production of one commodity its opportunity cost increases. It would be profitable to produce more of that commodity only if its market price increases.
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
Which of the following would increase the level of planned real investment?
A) an expectation of higher future profits B) an expectation of higher future costs C) an increase in business taxes D) an increase in the interest rate
If a country has a high level of income, it likely has:
A. a highly productive work force. B. widespread access to technology. C. high levels of physical capital. D. All of these are true.
A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is
a. inelastic. b. unit elastic. c. elastic. d. highly responsive to changes in income.