In a perfectly competitive industry, assume there is a permanent increase in demand for a product. The process of transition to a new long-run equilibrium will include:
a. the exit of firms.
b. temporarily lower production costs.
c. both a and b.
d. neither a nor b.
d
Economics
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Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________
A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase
Economics
You decrease your product price by $10 in market A but leave it unchanged in market B. Sales in A rise from 840 units per week to 940 while sales in B also rise from 770 to 790 . The difference-in-difference estimate of the effect of the price change is:
a. 80 units b. 100 units c. 120 units d. 140 units
Economics