When the price of most goods and services falls in a country, a fixed level of income and wealth will have higher purchasing power. This will increase the consumption and the aggregate quantity demanded. This situation represents the _____

Suppose that the price elasticity of demand for a product is -1 and that the price elasticity of supply is +1 . Assume also that the income elasticity of demand is +2 . Then an increase in income of 10% will raise equilibrium price by:

a. 10%. b. 5%. c. 20%. d. an annual amount that cannot be determined.

Flora's Flowers operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $10, AVC = $5, and the price per unit is $15 . In this situation,

a. Flora earns positive profits in the short run b. Flora will shut down in the short run c. Flora's supply curve will shift to the left d. Flora's supply curve will shift to the right e. the market price will rise in the long run