If the price of oil increased by 15 percent when oil producers believed that other prices were rising 10 percent over the same period, what would happen to the quantity of real output supplied by the oil industry?
Oil producers would be subject to the misperception effect. This would typically only occur in the short run. The oil producers would be fooled by the price changes in the short run and believe they had the opportunity to make greater profits by expanding their output, since they believe the value of their product is rising faster than other products.
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If technological breakthroughs in the computer and software industries cause large numbers of firms to consider investment projects they hadn't previously thought of,
A) the supply of loanable funds will shift rightward. B) the supply of loanable funds will shift leftward. C) the demand for loanable funds will shift rightward. D) the demand for loanable funds will shift leftward. E) an excess demand for loanable funds emerges and persists.
The existence of a positive externality demonstrates that
a. prices are too low b. there are third party costs c. the source is costly to identify d. the value society derives from a good may be greater than the value the person who buys it receives e. benefits are included in price, but not quantity