A cost-saving innovation in a perfectly competitive industry will lead to:
A. economic profits for a few firms for a short time.
B. economic profits for new firms.
C. entry by new firms.
D. a leftward shift of the industry supply curve.
Answer: A
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What is a good argument for using the model of the consumer despite the fact that it requires making many simplifying assumptions?
A) It is complex to solve. B) The assumptions are sometimes realistic. C) It explains observed patterns of behavior. D) It is used in many scholarly fields.
The bond supply curve slopes upward because:
A. for companies seeking financing, the higher the price of bonds the more attractive it is to sell bonds. B. as bond prices rise yields decrease. C. as bond prices rise people holding bonds are more tempted to hold them. D. as bond prices rise yields increase.
In the short run, the quantity of available hotel rooms is not particularly responsive to changes in price because hotels take time to build and to destroy. This implies that the short-run supply of hotel rooms is
A. in equilibrium. B. inelastic. C. elastic. D. greater than demand.
Which of the following is a desirable characteristic in an economy?
A. growing per-capita output B. population growing the same rate as output C. population growing faster than output D. rapid increase in the general price level