What are the pros and cons of a competitive market in the long run?
The pros include price equals minimum average total costs and marginal cost. Also, only a normal profit is earned in the long run. The major drawback of a competitive market is that it usually does not promote technological advances (because competitive firms do not earn the profits necessary to enable long-term investments in research and development).
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Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.
What is human capital, and how does it affect U.S. productivity?
What will be an ideal response?
When an individual's purchasing power changes due to a change in the price of a good or service, this is referred to as
A. real-income effect. B. substitution effect. C. marginal effect. D. utility effect.
Refer to the diagram. A government-set price floor is best illustrated by:
A. price A.
B. quantity E.
C. price C.
D. price B.