Milky Moo and Mega Cow are the only sellers of milk. Milky Moo's supply function is QsMMoo = 12P - 6 at prices above $0.50 and zero at prices below $0.50. Mega Cow's supply function is QsMCow = 9P - 3 at prices above $0.33 and zero at prices below $0.33. At a price of $0.45:
A. Milky Moo is the only supplier of milk.
B. Mega Cow is the only supplier of milk.
C. both Milky Moo and Mega Cow supply milk.
D. neither Milky Moo nor Mega Cow supply milk.
B. Mega Cow is the only supplier of milk.
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Graphically an increase in the short-run aggregate supply line represents a(n) ________, and a shift leftward of the long-run aggregate supply line represents a(n) ________.
A. adverse inflation shock; shock to potential output B. favorable inflation shock; shock to potential output C. shock to potential output; favorable inflation shock D. shock to potential output; adverse inflation shock
Output price changes cause substitution effects and scale effects. ?
Answer the following statement true (T) or false (F)
The wealth or real balances effect indicates that
A. a higher interest rate will increase the real value of many financial assets and therefore cause an increase is spending. B. a higher interest rate will decrease the real value of many financial assets and therefore cause a decline in spending. C. an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and increase spending. D. a lower interest rate will increase the real value of many financial assets and therefore cause an increase in spending.
In the open-economy macroeconomic model, if a country's interest rate rises, then its
a. net capital outflow and net exports rise. b. net capital outflow rises and its net exports fall. c. net capital outflow falls and its net exports rise. d. net capital outflow and net exports fall.