In the Cournot model, firms take their rivals' reactions as given.
Answer the following statement true (T) or false (F)
True
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Suppose the development of new drought-resistant hybrid seed corn leads to a 50-percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology. If the conditions in the corn production industry are approximated by the price-taker model, which of the following is most likely to occur?
a. The price of corn will increase. b. The price of soybeans (a substitute for corn) will increase. c. The profits of corn farmers who quickly adopt the new technology will increase. d. The profits of corn farmers who do not adopt the new technology will increase.
High levels of inflation ________ the real value of money and, hence, ________ short-run equilibrium output.
A. reduce; increase B. increase; decrease C. increase; increase D. reduce; decrease