In the market for domestic avocados, what would happen to the market clearing price and the equilibrium quantity if there was a drought in avocado growing areas?
A) The market clearing price would rise, and the equilibrium quantity would rise.
B) The market clearing price would fall, and the equilibrium quantity would rise.
C) The market clearing price would rise, and the equilibrium quantity would fall.
D) The market clearing price would fall, and the equilibrium quantity would fall.
C
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According to the table above, paper product production exhibits
A) decreasing returns to scale. B) constant returns to scale. C) increasing returns to scale. D) varying returns to scale.
Assume the Fed initiates an expansionary monetary policy that is correctly anticipated by economic agents in the economy. According to the rational expectation hypothesis, the result is
A) an increased price level in the short run, but no effect on price level in the long run. B) decreased real Gross Domestic Product (GDP) in the short run, but increased real Gross Domestic Product (GDP) in the long run. C) increased real Gross Domestic Product (GDP) and increased employment in the long run. D) an increased price level, but no change in real Gross Domestic Product (GDP) in the long run.