In the short run, an unexpected increase in prices will
a. reduce resource prices and increase the quantity of goods supplied.
b. decrease the productive capacity of firms and decrease the quantity of goods supplied.
c. increase the profits of firms, thereby leading them to expand output.
d. increase the profits of firms, thereby leading them to reduce output.
C
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The price of good A goes up. As a result the demand for good B shifts to the left. From this we can infer that:
A) good A is a normal good. B) good B is an inferior good. C) goods A and B are substitutes. D) goods A and B are complements. E) none of the above
Suppose a farmer is a price taker for soybean sales with cost functions given by TC = .1q2 + 2q + 30 MC = .2q + 2 If P = 6 , the profit-maximizing level of output is
a. 10 b. 20 c. 40 d. 80
When road construction crews work at less than 100 percent of effort during their work days in order to create overtime work for themselves, they are creating what economists describe as a
a. moral hazard problem b. work dependency problem c. principal-agent problem d. efficiency wage problem e. employment-management problem
If a firm converts a previously competitive industry into a monopoly without any changes in the cost curves, it will:
A.) increase output and price to generate more profit. B.) reduce output and raise price to generate more profit. C.) keep output the same but increase price to generate more profit. D.) reduce price and increase output to keep potential competitors from entering the industry.