ECON 040 Lecture Notes - Lecture 4: Aggregate Supply, Giffen Good, Opportunity Cost
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Question 1:-
If new manufacturers enter the computer industry, the [a] curve will [b] to the [c].
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Question 2:-
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect Andy's demand for [a] to [b].
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Question 3:-
Various factors cause the demand curve to shift. These can include:
A. | change in income | |
B. | changes in the number of buyers | |
C. | changes in future expectations | |
D. | all of the above. |
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Question 4:-
A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the .
A. | demand curve to the right | |
B. | supply curve to the right | |
C. | supply curve to the left | |
D. | demand curve to the left |
1) When positive economic profits exist in an industry:
the market price of the good produced by the industry is less than the marginal cost faced by the industry. |
the market price of the good produced by the industry is less than the average total cost of the industry. |
there is an exit of firms from the industry. |
resources flow from less productive uses to that particular industry. |
2) When price is less than the firms' minimum average total cost, ________.
firms' profits are likely to be maximum |
prices are likely to fall further |
new firms will enter the market |
existing firms will leave the market |
3) The entry of new firms into a perfectly competitive market will cause:
an increase in the profitability of existing firms. |
a decrease in the profitability of existing firms. |
a right shift of the demand curve of the good being produced by the firms. |
a left shift of the demand curve of the good being produced by the firms. |
4) Entry of new firms into an existing market causes:
a downward movement along the market supply curve. |
a leftward shift of the market supply curve. |
an upward movement along the market supply curve. |
a rightward shift of the market supply curve. |
5) The incentive for new firms to enter into a perfectly competitive market is primarily the:
high level of government intervention in the market. |
large number of buyers in the market. |
large number of existing firms in the market. |
positive profits observed for the existing firms in the market. |
1. A change in quantity supplied:
A. refers to a shift in the supply curve.
B. results from a change in a determinant of supply.
C. refers to a movement along a given supply curve.
D. is caused by a change in the number of sellers in the industry.
2. Which one of the following would most likely cause the supply curve for microwaves to shift to the right:
A. a decrease in the price of microwaves.
B. an increase in the wage rate earned by workers who produce microwaves.
C. a decrease in consumer preferences for microwaves.
D. an increase in the number of firms that produce microwaves
3. If the actual price sellers are pricing their goods at is currently above the equilibrium price. There is a ____________. Therefore, we would expect sellers to ____________ the price until the market reaches equilibrium.
A. |
surplus; raise |
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B. |
surplus; lower |
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C. |
shortage; raise |
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D. shortage; lower 4. Suppose the demand and the supply of wine both increase. The net effect of these changes in demand and supply will be
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