The country of Epsilon has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ________ aggregate supply
A) at the same pace as long-run
B) slower than long-run
C) slower than short-run
D) faster than long-run
A
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Suppose the demand for milk is relatively inelastic. What happens to sales revenue if the government imposes a price floor above the free-market equilibrium price in the market for milk?
A) Sales revenue remains unchanged. B) Sales revenue rises. C) Sales revenue falls. D) It cannot be determined without information on prices.
Refer to Figure 6-12. Suppose the diagram shows the supply curves for a product in the short run and in the long run. Which supply curve represents supply in the short run and which curve represents supply in the long run?
A) Either SA or SB could represent supply in the long run; in the short run the supply curve must be a horizontal line. B) SA represents supply in the short run and SB represents supply in the long run. C) Either SA or SB could represent supply in the short run; in the long run the supply curve must be a vertical line. D) SB represents supply in the short run and SA represents supply in the long run.