According to New Keynesians, why can firms increase output in the short run in response to higher prices?
What will be an ideal response?
In the new Keynesian view, in the short run many input costs are fixed, so firms can expand output without experiencing an increase in input cost that is proportional to the increase in the prices of their products.
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Which of the following must occur as a result of ceilings on apartment rents that are set below market clearing rental rates?
A) Property owners respond to the ceilings by increasing maintenance and repairs. B) Property owners respond to the ceilings by constructing new apartment buildings. C) There is a decrease in the quantity of apartments that prospective tenants wish to rent. D) There is a decrease in the quantity of apartments that property owners offer for rent.
If marginal costs fall below average cost, average cost must be
a. Be increasing b. Be decreasing c. Stay constant d. None of the above