Why is it important that consumers respond differently to temporary and permanent increases in their incomes?
A) This implies that consumption will be highly sensitive to temporary changes in income.
B) This implies that a temporary tax cut will have a larger effect than a permanent one on current consumption.
C) this tells us that the timing of income increases for consumers is irrelevant.
D) this has implications for the relative effects of temporary and permanent tax cuts.
D
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A sudden decrease in the market demand in a competitive industry leads to
a. Losses in the short-run and average profits in the long-run b. Above average profits in the short-run and average profits in the long-run c. New firms being attracted to the industry d. Demand creating supply
For perfectly competitive firms, what is the relationship among market price (P), average revenue (AR), and marginal revenue (MR)?
a. P = AR = MR b. P > AR = MR c. P = AR > MR d. P = AR < MR e. P < AR = MR