Supply shocks:
A. occur more frequently than demand shocks.
B. usually result from fiscal and monetary policy changes.
C. occur when sellers face unexpected changes in the availability and/or prices of key inputs.
D. have been responsible for most of the recessions in the United States since World War II.
Answer: C
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_________ is where it is cheaper for separate products to be produced independently than for one firm to produce the same products jointly.
Fill in the blank(s) with the appropriate word(s).
Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands rises above the minimum of its average variable cost, but still lies below the minimum of average total cost, in the short run the firm will
a. experience losses but will continue to produce rubber bands. b. shut down. c. earn both economic and accounting profits. d. raise the price of its product.