In the above figure, starting at E1, if there is a supply shock that is temporary, the
A) aggregate supply would shift to SRAS1 and LRAS0 would shift to LRAS1.
B) aggregate supply would shift to SRAS2 and LRAS0 would shift to LRAS1.
C) aggregate supply would shift to SRAS1 and then return to SRAS0.
D) aggregate supply would shift to SRAS0 and LRAS1 would shift to LRAS0.
C
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Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test:
a. equals zero. b. is greater than the marginal cost of the test c. is lower than the marginal cost of an additional test d. equals the marginal cost of the test e. both a and b.
Assume the demand schedule for cookies is downward sloping. If the price of cookies falls from $2.50 to $2.25 per dozen: a. the demand for cookies will fall
b. the demand for cookies will rise. c. a larger quantity of cookies will be demanded. d. a smaller quantity of cookies will be demanded.