When there is an increase in the price of a good,
A. the demand curve will shift to the left.
B. the elasticity of demand will determine the degree to which quantity demanded rises.
C. the demand curve will shift to the right.
D. the elasticity of demand will determine the degree to which quantity demanded falls.
Answer: B
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Which of the following is an example of an undesirable side effect of the operation of the market mechanism?
A. Negative externalities B. Comparative advantages C. Abstractions D. Productivity growth
The long-run average total cost curve
a. is an envelope-shaped curve mapped out by the short-run average total cost curves for alternative plant sizes. b. intersects the minimum point of each short-run average total cost curve for alternative plant sizes. c. rises throughout its entire range when increasing returns are present. d. falls throughout its entire range due to the law of diminishing returns.
Graphically the intersection of the aggregate demand curve and the short-run aggregate supply line determines:
A. long-run equilibrium. B. exogenous spending. C. potential output. D. short-run equilibrium.
As the maximum output level (real GDP) is approached, the aggregate supply curve
A. becomes flatter. B. is downward sloping. C. becomes steeper. D. remains unchanged.