Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?
A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
B) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.
C) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25.
D) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25.
A
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Patents allow manufacturers to block the entry of new firms into an industry through
a. infringement suits b. economies of scale c. limit pricing d. price discrimination e. a government franchise
The Lucas critique is an objection to the assumption that
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