What serves as the supply curve for a perfectly competitive firm? Why is this supply curve upward-sloping, or why does it take a higher price to get a firm to produce and sell more output?
What will be an ideal response?
The supply curve for a perfectly competitive firm is its MC curve above the AVC. Diminishing returns cause the MC curve to increase. It therefore takes a higher price to induce a firm to produce and sell more output because the firm must cover its higher MC.
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The above table has the demand for money schedule
a) If the Fed supplies $1.1 trillion dollars, what is the equilibrium interest rate? b) Discuss how equilibrium is restored if the interest rate is greater than the equilibrium rate found in part (a).
Corn and soybeans are alternatives that could be grown by most farmers. If government subsidies for ethanol lead to higher corn prices, this will
a. increase the supply of corn. b. increase the supply of soybeans. c. decrease the supply of soybeans. d. decrease the supply of corn. e. have no effect on the supplies of corn and soybeans.