Exhibit 7-13 Price and cost per unit curves
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In Exhibit 7-13, if the price is P3, the firm will
A. produce Q3 and earn an economic profit.
B. produce Q3 and incur a loss in the short run.
C. produce Q3 and earn zero economic profit.
D. decide not to produce any output to minimize the loss.
Answer: B
Economics
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If Joe receives an increase in his wage rate and decides to decrease his hours worked, the
A) substitution effect and the income effect must be equal. B) substitution effect must exceed the income effect. C) income effect must exceed the substitution effect. D) substitution effect must be zero.
Economics
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.
Economics