What is a long-run supply curve?
What will be an ideal response?
A long-run supply curve is a curve showing the relationship between market price and quantity supplied in the long run.
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Define and illustrate a principal-agent problem
If the demand for a product increases, but the supply for the product stays the same, which of the following would happen?
a. There will be a scarcity of the product. b. There will be an equilibrium quantity of the product. c. There will be a shortage of the product. d. There will be a surplus of the product.
Assume a price elasticity of demand of 0.50. If the tobacco lobby is successful in reducing a tax on the price of cigarettes by 10 percent, the quantity demanded will:
A. Decrease by 5 percent. B. Decrease by 2 percent. C. Increase by 5 percent. D. Increase by 2 percent.
Suppose that a market for a product is in equilibrium at a price of $3 per unit. At any price below $3 per unit:
A. there will be an excess demand for the product. B. there will be an excess supply of the product. C. the quantity demanded of the product will be less than the quantity supplied of that product. D. there will be a surplus of that product.