Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the price of coffee grinders is $50. At this price
A) there is a surplus equal to 90 coffee grinders and the price of coffee grinders will fall until demand is equal to supply.
B) there is a surplus equal to 90 coffee grinders that will be eliminated when the price falls to $25.
C) the quantity supplied exceeds the quantity supplied by 100. The price will eventually fall to $25 where quantity demanded will equal quantity supplied.
D) the supply exceeds the demand by 90. Some producers will have an incentive to offer to sell coffee grinders at a lower price.
B
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Which of the following best describes how a perfectly competitive industry would respond to a sudden increase in popularity of the product? The market demand curve would shift to the right, leading to:
A. a higher equilibrium price in the short run and a permanent increase in economic profit. B. a lower short-run equilibrium price due to the entry of firms into the market. C. a higher equilibrium price in the short run and entry into the market in the long run. D. no change in the short-run equilibrium price, and a higher long-run equilibrium quantity.
It is easy to discern the difference between vigorous competition and the exercise of monopoly power.
Answer the following statement true (T) or false (F)
If the U.S. dollar depreciates in the foreign exchange market, U.S. exports will be __________ and U.S. imports will be __________
A) relatively less expensive; relatively less expensive B) relatively less expensive; relatively more expensive C) relatively more expensive; relatively more expensive D) relatively more expensive; relatively less expensive E) unaffected; relatively less expensive
An increase in long-run average costs resulting from decreases in output is
A. attributed to economies of scale. B. attributed to diseconomies to scale. C. attributed to constant returns to scale. D. attributed to the law of diminishing marginal product.