If firms in a competitive market are identical, the long-run market supply curve is horizontal
Indicate whether the statement is true or false
False. The horizontal long-run supply curve also requires that factor prices do not increase with industry expansion and that the number of firms is not restricted.
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Which of the following assumptions is found in Friedman's model but not in the new classical model?
A) Supply of labor depends on expected real wage. B) Workers gradually adapt their expectations of the price level to the actual price level. C) imperfect information D) market-clearing labor market
Which of the following is the study of “what is” rather than “what ought to be”?
a. normative economics b. subjective economics c. positive economics d. the theory of the origin of humanity
If the punishment associated with breaking a ban is not severe enough, it may:
A. not alter the trade-offs enough to change the consumption patterns of the banned good. B. cause even more consumption of the good, exaggerating the problem. C. still decrease the consumption of the good if the price of the good changes. D. still be effective if it gains media attention.
A group of firms, operating in collusion, incur costs of production of $15 per unit. The price that currently maximizes their profit is $19 . Knowing that potential competitors could enter the market with production costs of $17 per unit, what price are the colluders likely to charge? Why?