Use the following graph for a competitive market to answer the question below.
In a market with supply and demand curves as shown above, a price floor of $2.50 will result in
A. a black-market price greater than $2.50.
B. a surplus of 10 units.
C. a shortage of 10 units.
D. no shortage or surplus.
Answer: B
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Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units.. Which of the following are true?
a. AC rise by $1.00 b. AC fall by $1.50 c. AC rise by $1.50 d. AC fall by $1.00
In recent years, each 1 percent drop in output is associated with the loss of more than
a. five million jobs b. one million jobs c. half a million jobs d. two hundred thousand jobs e. one hundred thousand jobs
An unexpected sharp reduction in inflation will most likely result in
a. the rapid growth of output and employment. b. a reduction in the actual rate of unemployment. c. a reduction in the natural rate of unemployment. d. a temporary increase in unemployment and a decline in real output.
Use the following diagrams to answer the next question.
Assume the economy is on aggregate demand AD4. The Fed should attempt to raise investment by enough to shift aggregate demand from AD4 to ________.
A. AD3 and then to AD2 B. AD3 and then to AD1 C. AD2 and then to AD3 D. AD1 and then to AD2