In the text, when the Nick Rudd Ice Company starts as a monopoly and then finally faces competition from a new entering ice company, its
a. price falls, its economic profit falls, but its output increases
b. price falls, its economic profit falls, and its ATC falls
c. price falls, its economic profit falls, and it faces a more elastic demand curve
d. price increases, its economic profit falls, and it faces a less elastic demand curve
e. ATC falls, its economic profit falls, and it faces a less elastic demand curve
C
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Price floors are only effective below the market equilibrium.
Answer the following statement true (T) or false (F)
A tax imposed on a good can:
A. discourage consumption of the good. B. encourage production of the good. C. increase the supply of complementary goods. D. prevent the market from reaching an efficient equilibrium.
Expectations that the price level will decrease in the future will _____
a. make the current consumption function flatter b. shift the current consumption function downward c. result in an upward movement along the current consumption function d. result in a downward movement along the current consumption function e. make the current consumption function steeper
Suppose that the Fed makes a $100 billion open-market sale of Treasury bonds, and the money multiplier is 6 . Which of the following impacts aremostlikely to result?
a. The money supply shifts inward, and the equilibrium interest rate rises in the money market. b. The money supply shifts outward, and the equilibrium interest rate falls in the money market. c. Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy. d. Both a. and c. are correct. e. Both b. and c. above are correct.