Explain why the short-run aggregate supply curve is a relatively flat, horizontal line
What will be an ideal response?
In the short run, prices are sticky and output is determined primarily by demand. Firms will adjust production to meet demand. Since firms will supply all the output to meet demand with only small changes in price, the short-run aggregate supply curve is relatively flat.
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The table below shows the relationship between the number of times you get your car washed each month and your total monthly benefit from car washes. Each car wash costs $15.Number ofCar WashesPer MonthTotal MonthlyBenefit fromCar Washes0$01$202$363$484$565$60What is the marginal cost of the 5th car wash each month?
A. $4 B. $14 C. $15 D. $12
Under adaptive expectations theory, people expect the rate of inflation this year to be
La Dila Corp . decided to sponsor an AIDS awareness campaign when it discovered that its rival had been sponsoring several fund-raising events for AIDS-afflicted children. This is an example of ________
A) bounded rationality B) pure altruism C) impure altruism D) consumerism
By promoting its brand name heavily, the monopolistically competitive firm
A) earns more profit in the long run. B) signals its long-term intention to stay in the industry. C) signals its intention to leave the industry. D) guarantees a short run profit.