When some firms leave a perfectly competitive market, the price:
A. falls, and profits of those left rise.
B. falls, and profits of those left fall.
C. increases, and profits of those left rise.
D. increases, and profits of those left fall.
C. increases, and profits of those left rise.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Which of the following is most likely to occur in the labor market during a recession?
A. The growth rate of real wages declines. B. New entrants to the labor market have an easier time finding jobs. C. Bonuses and promotions become more frequent. D. The supply of labor increases dramatically.
In most cases, the fact that one of the market curves is perfectly inelastic is not sufficient to conclude that a per-unit tax in that market is efficient. A tax on land rents is an exception. Can you explain why?
What will be an ideal response?
Drivers are charged a price to use a tollway. But even tollways, such as the Tri-State Tollway near Chicago, become heavily congested during the morning and evening rush hours. Thus,
A) the rush hour represents a surplus of cars. B) your textbook author is wrong in claiming congestion is caused by zero prices. C) higher tolls are required during rush hours to reduce congestion. D) growing population is indeed the problem.