In a –-based economy, transactions require that each party have something the other desires. – increases market – by serving as a common commodity everyone wants. Now a transaction requires only that the – have something the – desires and that the buyer have enough money to pay the seller’s asking price.

Suppose the market for autoworkers is initially in equilibrium, but then the demand for automobiles increases and simultaneously the automakers allow autoworkers less flexibility working at the plants. What happens in the market for autoworkers?

A) The equilibrium wage rate will increase and the equilibrium quantity of labor will increase, decrease or stay the same. B) The equilibrium wage rate will increase, decrease or stay the same and the equilibrium quantity of labor will increase. C) The equilibrium wage rate and the equilibrium quantity of labor will both decrease. D) The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase.

?Suppose a perfectly competitive firm and industry is in long-run equilibrium and the firm earns an economic profit in the short run. Which of the following is likely to occur in the long run?

a. ?The market supply curve will shift to the right, and the market price will decrease. b. ?The market supply curve will shift to the left, and the market price will increase. c. ?The firm will continue to earn economic profit. d. ?There will be an increase in the amount of economic profit earned by the firm. e. ?Industry output will decrease.