All the supply of peppermint oil is produced from mint plants grown in one county by several competitive growers (the number of growers is not limited). The quality of land in the county varies greatly. Would you expect the long-run market supply curve to slope upward, downward, or remain constant? Why?
What will be an ideal response?
The long-run market supply curve will slope up because the growers have different costs. Those growers with poor-quality land have a higher average cost of production. The horizontal sum of the individual supply curves will slope up.
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When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.
Answer the following statement true (T) or false (F)
An individual seller in perfect competition will not sell at a price lower than the market price because
A) the seller can sell any quantity she wants at the prevailing market price. B) demand for the product will exceed supply. C) the seller would start a price war. D) demand is perfectly inelastic.
According to the accelerationist Phillips curve, ________
A) expectations adjust continually to the latest information B) increases in inflation cause the unemployment gap to widen C) inflation will change so long as an unemployment gap persists D) all of the above E) none of the above
For a construction company that builds houses, which of the following costs would be a fixed cost?
a. the $20 per hour wage paid to a construction foreman b. the $30,000 per year salary paid to the company's bookkeeper c. the $2 per worker-hour paid to the state government for workers' compensation insurance d. All of the above are correct.