What determines whether the industry long-run supply curve is upward sloping or horizontal?
What will be an ideal response?
When firms enter and exit the industry, new resources are either drawn into the industry or are temporarily left unemployed. If these movements in resources cause resource prices to rise, then the industry will be an increasing-cost industry and have an upward sloping long-run supply curve. If these movements in resources do not affect resource prices, then the industry is a constant-cost industry and the long-run supply curve is horizontal.
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Which price index published by the US federal government represents wholesale price changes?
A) Consumer Price Index B) Producer Price Index C) GDP deflator D) Dow-Jones Industrial Average
Refer to the above figure. How do you describe what is happening as the economy moves from point C to point B?
A) Previously unemployed resources are now being devoted to the production of wool. B) Previously unemployed resources are now being devoted to the production of bread. C) The economy has increased its wool production by 30 bales at an opportunity cost of 250 loaves of bread. D) The economy has acquired new resources for making bread.