In a market that is contestable, but has only a few sellers, the
a. threat of new entrants will prevent prices from rising above the competitive level.
b. producers will be able to charge prices that are high enough to produce long-run economic profits.
c. producers will not face new competition because the barriers to entry are high.
d. market will never be expected to come close to the competitive result.
A
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Which of the following would cause prices to rise and real GDP to fall in the short run?
a. an increase in the expected price level. b. an increase in the capital stock. c. an increase in the money supply. d. an increase in taxes.
Use the figure below to answer the following question.
The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S3?
A. a tax on wheat production B. a decrease in the price of wheat C. an increase in the price of wheat D. a subsidy for wheat production