How does the exit of firms from a monopolistically competitive market affect the demand curves faced by the existing firms?
What will be an ideal response?
The exit of firms from a monopolistically competitive market shifts the demand curves faced by the existing firms to the right and causes them to become steeper.
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Changes in which of the following do NOT shift the AS curve?
i. the price level ii. potential GDP iii. the money wage rate A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
Because the productivity of labor decreases as the quantity of labor employed increases
A) the quantity of labor a firm demands increases as the real wage rate decreases. B) the quantity of labor a firm demands increases as the money wage rate decreases. C) the labor demand curve shifts right as the real wage rate decreases. D) the aggregate production function shifts upward as the real wage rate decreases.
David Ricardo's model, which provided an explanation of why nations trade, was based on:
a. labor productivity. b. technology. c. population. d. government control
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.