The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. What happens in the short run?
A) Firms will enter the market.
B) Some of the existing firms shut down.
C) The firms decrease production.
D) The firms increase production.
D
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In a market with asymmetric information, ________
A) buyers tend to forget relevant information about the good being traded B) buyers set the price of the good being traded C) buyers and sellers have different information about the good being traded D) buyers have very low bargaining power
An increase in inflationary expectations __________ interest rate
A) raises the natural B) raises the nominal C) lowers the natural D) lowers the nominal
A central bank can bring output back up to efficient level in the New Keynesian model by
A) decreasing the money supply. B) increasing the money supply. C) decreasing government expenses. D) increasing government expenses.
In order to minimize deadweight loss generated by taxation, a tax should be placed on goods that are:
A. price elastic. B. price inelastic. C. expensive. D. popular.