Suppose the cost of a CD is $20. As online retailers enter the market with new technology, the price of CDs ________, and traditional music stores find that ________
A) decreases; their AVC exceeds the new lower price and they exit the industry
B) decreases; their ATC curve shifts lower and their profit increases
C) increases; they compete with online retailers at the new higher price
D) increases; their costs have risen due to the new technology
E) decreases; they compete with online retailers with higher profits
A
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Supply-side economists believe that a reduction in the tax rate
a. always decrease government tax revenue. b. shifts the aggregate supply curve to the right. c. provides no incentive for people to work more. d. would decrease consumption.
A firm's demand for labor is referred to as a derived demand because
A. The quantity of goods and services labor can purchase is derived from the wages labor receives from the firm. B. It is derived from the supply of labor. C. It is derived from the MPP of labor. D. It is derived from the demand for the product that the labor is producing.