If a new government adopted some ill-advised regulations causing the economy to be less efficient ________
A) the ensuing negative supply shock would lead to an immediate rise in inflation
B) in the short-run this would create a negative output gap but eventually the previous general equilibrium would be restored by subsequent rightward shifts of the AS curve
C) there would be no permanent changes in output and inflation
D) all of the above
E) none of the above
A
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In the above figure, if this natural monopolist were regulated and allowed to earn a "fair" rate of return, it would sell the product at the price
A) A. B) C. C) B. D) F.
The assumption(s) made to construct a kinked-demand oligopoly model is (are) that:
a. all firms in the industry will ignore the price changes made by any one firm. b. any price decrease will be ignored, but price increases will be followed. c. all firms will follow a price decrease but will ignore any price increase. d. all price changes made by any firm will be followed by all of the other firms. e. price can go up, but it cannot go down.