Suppose a perfectly competitive industry is in long-run equilibrium. If a decrease in demand leads to a lower long-run price, we know that
A. some firms will be losing money in the long run.
B. this is an increasing-cost industry.
C. this is a decreasing-cost industry.
D. after further adjustments, price will rise to its original level.
Answer: B
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Explain what should happen to the demand curve of monopolistically competitive firms as consumers increasingly perceive their products to be more like commodities. What industrial structure does this lead to?
What will be an ideal response?
China is a clear example of a country that has:
A. achieved economic growth without a democratic regime. B. achieved economic growth only after a democratic regime was in place. C. failed to achieve economic growth without a democratic regime. D. failed to achieve economic growth, despite having a democratic regime.
If the price of motel rooms increases by 10 percent while the prices of other goods and services increase by 5 percent on average, the relative price of motel rooms has:
A. decreased by 10 percent. B. increased. C. remained constant. D. decreased by 5 percent.
Which of the following would be classified as fiscal policy?
A) The federal government passes tax cuts to encourage firms to reduce air pollution. B) The Federal Reserve cuts interest rates to stimulate the economy. C) A state government cuts taxes to help the economy of the state. D) The federal government cuts taxes to stimulate the economy. E) States increase taxes to fund education.