An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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If bank depositors in the U.S. suddenly decided to withdraw in currency everything in their checking accounts, commercial banks would
A) be better off because their legally required reserves would decline. B) be unable to meet their demands and would become insolvent. C) borrow the required Federal Reserve notes to meet the requests for currency. D) give them the currency held in their vaults as backing for the checking accounts. E) refuse to honor their requests for 30 days.
Control of a scarce resource or input can serve as an entry barrier.
Answer the following statement true (T) or false (F)
Suppose the inverse market demand is given by P = 75 ? 0.5Q. If the incumbent continues to produce 20 units of output, which of the following equations best summarizes the potential entrant's residual demand curve?
A. P = 65 ? 0.5Q B. P = 20 ? 0.5Q C. P = 65 ? 2Q D. P = 150 ? 2Q
Refer to Figure 10.4. If the market was perfectly competitive, the consumer surplus would be:
A. $850. B. $625. C. $300. D. $100.