Suppose the economy is in long-run equilibrium. In a short span of time, there is a large emigration of skilled workers, a major depletion of oil fields, and a major new regulation limiting electricity production. In the short run, we would expect
a) the price level to rise and real GDP to fall.
b) the price level and real GDP both to rise.
c) the price level to fall and real GDP to rise.
d) the price level and real GDP both to stay the same.
Ans: a) the price level to rise and real GDP to fall.
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Indicate whether the statement is true or false
Odd pricing became common in the late 19th century. Although the origins of odd pricing are uncertain, several explanations for the practice have been given. Which of the following is one of these explanations?
A) Odd pricing began in an era when it was difficult for owners and managers of firms to determine the marginal cost of the goods and services they sold. Odd prices were rough estimates designed to cover costs plus earn firms a profit. B) Odd pricing was begun in England in the 1700s when America was part of the British Empire. Members of the British Royal Court were given the task of pricing products. After independence, merchants in the United States carried on the practice of odd pricing. C) After the passage of the Sherman Act in 1890, merchants used odd pricing as a means of avoiding prosecution for antitrust violations. D) Odd pricing forced employees to give customers change. This made it more likely that employees would record sales rather than pocketing their customers' money.
Which of the following would be least likely to affect the supply of automobiles?
a. higher prices for steel and other resources used in producing automobiles b. a successful physical fitness plan encouraging Americans to walk rather than drive to their destinations c. a technological improvement reducing the production costs of automobiles d. increased wages for members of the United Auto Workers union
Which of the following is always TRUE for a perfectly competitive firm?
A) P = d = MR B) P = d = AVC C) MC = MR = AVC D) AVC = ATC = P