A temporary decrease in the price of oil would be considered a:
A. long-run supply shock.
B. demand shock.
C. short-run supply shock.
D. The changing price of oil would not affect any of these.
Answer: C
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Which of the following is not a component of gross investment?
A. Construction of a suburban housing project. B. The purchase of a new drill press by the Ajax Manufacturing Company. C. The piling up of inventories on a grocer's shelf. D. The purchase of 100 shares of AT&T by a retired business executive.
To calculate the point elasticity of demand, a manager must know
A) where the supply curve intersects the demand curve. B) two points on the demand curve. C) information about the entire demand curve. D) whether or not the demand curve is linear.
John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for $5,000 more than she could have before. John's house painting
a. creates a negative externality for Christine b. makes John a free rider c. results in an efficient market outcome for both parties since both benefit d. creates a positive externality for Christine e. was poorly done
When the price of a good is below its average variable cost, a perfectly competitive firm is better off ceasing production. In this case, it suffers a loss equal to its _____
a. fixed cost b. average variable cost c. marginal cost d. total variable cost