The figure above shows the costs for the typical grower in the perfectly competitive turnip market. Currently, the price of a ton of turnips is $1,200. The demand for turnips increases permanently
The turnip industry experiences neither external economies nor external diseconomies. In the long run, the price of a ton of turnips ________. A) increases so it is above $1,200
B) is $1,200 and turnip growers will make normal profit
C) decreases so it is below $1,200, and turnip growers will make normal profit
D) decreases so it is below $1,200 and the turnip growers make an economic profit
B
You might also like to view...
In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, a decline in the reserve requirement ________ the demand of reserves, ________ the federal funds rate, everything else
held constant. A) decreases; lowering B) increases; lowering C) increases; raising D) decreases; raising
Currency circulated by banks that could be redeemed for gold was called
A) junk bonds. B) banknotes. C) gold bills. D) state money.
If demand is inelastic and the price of a product decreases by 10 percent, then
A) the change in quantity demanded is less than 10 percent. B) the change in quantity demanded is equal to 10 percent. C) the change in quantity demanded is greater than 10 percent. D) the decrease in quantity demanded is greater than 0 percent.
If a country wants to keep its exchange rate fixed, it must
A) allow its currency value to vary with market supply and demand in foreign exchange markets. B) be a member of the IMF. C) vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary. D) eliminate its foreign exchange reserves.