The CPI is the average price of all goods and services produced within the economy

To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. This may be a credible threat if:

A) production exhibits economies of scale. B) production exhibits diseconomies of scale. C) production costs may fall due to learning-by-doing. D) A and C are correct. E) B and C are correct.

People often complain about price gouging after a disaster such as a hurricane. Suppose the government successfully prevented price increases due to the disaster. We would expect

A) reconstruction to take longer because the quantity supplied of new materials would increase more slowly. B) reconstruction to take less time because the demand for materials would increase faster. C) reconstruction never to occur. D) reconstruction to take less time because the government could rebuild more quickly when people are not in the way.