Judgment by performance means that the competitiveness of a market is determined by:
A. the structure of the industry.
B. technological considerations.
C. the number of firms in the market.
D. the actual behavior of firms in the market.
Answer: D
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
A decline in the price of resource A will
A. shift the demand curve for A to the right. B. shift the demand curve for A to the left. C. reduce the demand for complementary resource B. D. increase the demand for complementary resource B.
Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. The new general equilibrium price of cereal is:
A. $9.66. B. $9.76. C. $7.76. D. $11.76.
In the short-run, a monopoly is most likely to achieve
a. An average rate of return b. Above average profits c. Economic Profits d. Both B&C