When a perfectly competitive firm or a monopolistically competitive firm is making zero economic profit,
a. no firms will want to enter or exit.
b. some firms will want to leave.
c. some firms will want to enter.
d. market demand shifts to the left.
e. the price of the output will rise in the long run.
a
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A short-run open-economy model with demand shocks can analyze the effect on if output prices and factor prices are sticky.
a. inflation b. real economic activity (real GDP and unemployment) c. long-run variables d. expectations
Which of the following is an example of a supply shock?
A. A surge in consumer optimism prompts increased buying of goods and services. B. A surprise tax rebate from the government gives people more money to spend. C. A dramatic increase in energy prices increases production costs for firms in the economy. D. Government increases spending on education.