Assume that the 4K and OLED television sets industry is perfectly competitive. Suppose a producer develops a successful innovation that enables it to lower its cost of production. What happens in the short run and in the long run?
A) Initially, the firm will be able to increase its profit significantly, but in the long run its profits will still be greater than zero but lower than its short-run profits because other firms would also innovate.
B) The firm will probably incur losses temporarily because of the high cost of the innovation, but in the long run it will start earning positive profits.
C) This firm will be able to earn above normal profits indefinitely if it obtains a patent for its innovation.
D) The firm will be able to increase its economic profits temporarily, but in the long run its economic profits will be eliminated as other firms copy the innovation.
Answer: D
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Payroll tax is a proportional tax
a. True b. False Indicate whether the statement is true or false
Under price discrimination, a monopolist increases the price for the ________ consumer group so that overall profit will ________
a. elastic; rise b. elastic; fall c. inelastic; rise d. inelastic; fall
Figure 14-5
In , AD1 and SRAS1 indicate an economy initially operating at full-employment output level, Y1. The long-run impact of the Fed unexpectedly shifting to a more restrictive monetary policy will be
a.
a decrease in aggregate demand to AD2 and a decrease in real output to Y2.
b.
a decrease in the full-employment level of output to Y2.
c.
a decrease in aggregate demand to AD2 and an increase in short-run aggregate supply to SRAS2, causing the price level to fall to P3 and real output to remain unchanged at Y1.
d.
no change; AD and SRAS will stay at AD1 and SRAS1.
Fractional reserve banking began as a search for
A. a different metallic monetary system. B. additional sources of gold. C. different types of borrowers. D. additional profits.