How does the long run differ from the short run in perfect competition?
a. In the long run, some firms will charge higher prices than others.
b. In the short run, a firm seeks to maximize profit; in the long run it seeks to minimize cost.
c. In the short run, a firm seeks to maximize profit; in the long run it seeks to maximize revenue.
d. The long run is long enough to allow for the entry of new firms into the industry.
Ans: d. The long run is long enough to allow for the entry of new firms into the industry.
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If the cross elasticity of demand between coffee and tea is positive, an increase in the price of tea will shift the demand curve for
A) tea rightward. B) tea leftward. C) coffee rightward. D) coffee leftward.
If the natural unemployment rate is 7 percent and the current unemployment rate is 5 percent, then the economy is
A) producing a level of Real GDP that is greater than the level of natural Real GDP. B) in a recessionary gap. C) producing a level of Real GDP that is less than the level of natural Real GDP. D) a and b E) b and c