Assume a perfectly competitive industry is in long-run equilibrium at a price of $30. If this industry is an increasing-cost industry and the demand for the product increases, long-run equilibrium will be reestablished at a price
A. less than $30.
B. of $30.
C. greater than $30.
D. either greater than or less than $30 depending on the magnitude of the decrease in demand.
Answer: C
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In the above figure, what is the profit-maximizing price and output?
A) $9, 14 B) $13, 14 C) $11, 16 D) $10, 17
Assuming price elasticity of demand is reported as an absolute value, a price elasticity of one indicates:
A. the percentage change in quantity demanded will equal the percentage change in price. B. the percentage change in quantity demanded will equal one. C. both the percentage change in price and quantity demanded must equal one. D. the percentage change in quantity demanded and the percentage change in price must sum to one.
Vertical relationships can increase profits through
a. preventing firms from evading regulation b. eliminating a double-markup problem c. making the incentives of manufacturers and retailers unaligned d. preventing price discrimination
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.