Refer to Figure 12-13. Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. If the firm represented in the diagram continues to stay in business, in the long-run equilibrium
A) it will expand its output to Q2 and face a price of P2.
B) it will expand its output to Q3 and face a price of P1.
C) it will continue to produce Q1 but faces the higher price of P2.
D) it will reduce its output to Q0 and face a price of P0.
A
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The slope of the aggregate supply curve becomes steeper, the faster the costs of production adjust to prices and the smaller the amount of excess capacity in the economy
a. True b. False Indicate whether the statement is true or false
Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?
a. an unprecedented increase in truck sales b. an immediate response by GM and Dodge c. a visit from the antitrust authorities of the government d. a revolution from Ford stockholders e. announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years