In the above figure, if aggregate demand does not change, the short-run equilibrium will
A) eventually adjust to a long-run equilibrium with a higher price level.
B) not adjust on its own.
C) eventually adjust to a long-run equilibrium with a lower price level.
D) None of the above answers are correct.
C
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Two goods are substitutes if:
A) an increase in the price of one leads to a shift to the left in the demand curve for the other. B) an increase in the price of one leads to an increase in demand for the other. C) an increase in the price of one will increase the supply of the other. D) a fall in the price of one leads to a reduction in supply for the other.
A monopolist is earning an economic profit. At the present output level, MR = $35 and MC = $30 . Which of the following should the firm do to increase profit?
a. raise output and lower price b. do not change price or output c. raise price and raise output d. raise price and lower output e. lower price and lower output