If a decrease in the Z factors resulted in a very large change in the price level and a very small change in aggregate output
A. then the U.S. economy must have been on the very flat part of its short-run aggregate supply curve.
B. then the U.S. aggregate demand curve must be very steep.
C. then the U.S. economy must have been on the very steep part of its short-run aggregate supply curve.
D. then in the U.S. economy investment demand must not be sensitive to the interest rate.
Answer: C
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With asymmetric information among consumers and positive search costs c, all the other firms in the market are charging a monopoly price Pm. A firm may lower its price
A) by less than c to attract more buyers when there are many firms in the market. B) by more than c to attract more buyers when there are many firms in the market. C) by less than c to attract more buyers when there are few firms in the market. D) by more than c to attract more buyers when there are few firms in the market.
Cap and Trade is a system aimed at correcting for externalities by
a. imposing taxes. b. establishing tradable permits. c. placing quotas on specific firm’s output. d. limiting exports.
Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $15, we would expect that
A) price will decrease until quantity demanded equals quantity supplied. B) supply will increase until quantity demanded equals quantity supplied. C) demand will decrease until quantity demanded equals quantity supplied. D) there will be no change in the price since the market is in equilibrium.
Is a firm economically inefficient if it can cut its costs by producing less? Why or why not?
What will be an ideal response?