For a firm in a perfectly competitive market, a price decrease:
A. increases the profit-maximizing quantity.
B. lowers the profit-maximizing quantity.
C. is unrelated to the profit-maximizing quantity.
D. signifies the firm should leave the market.
B. lowers the profit-maximizing quantity.
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The slope of the consumption function is equal to
A) the change in national income divided by the change in consumption. B) the change in disposable income divided by the change in consumption. C) the change in consumption divided by the change in personal income. D) the change in consumption divided by the change in disposable income.
Suppose right now the inflation rate is 3 percent and the unemployment rate is 4 percent, but 10 months from now unemployment has dropped to 1 percent. Based on the Phillips curve, what else can you assume about the economy 10 months from now?
a. Inflation will also be 1 percent. b. Real wages will be 1 percent higher. c. Inflation will still be very near 3 percent. d. Inflation will be greater than 3 percent.