Long-run aggregate supply shocks are not a source of business cycle fluctuations in the ________, because ________
A) traditional Keynesian model; long-run supply shocks are incompatible with adaptive expectations
B) traditional Keynesian model; demand fluctuations are considered of dominant importance
C) real business cycle model; shocks cannot persist in the long run, when prices and wages are flexible
D) new Keynesian model; such shocks are anticipated by forward-looking consumers and firms
B
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Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts increases from $15 to $20
A) producer surplus will rise from $13 to $28. B) there will be a surplus of polo shirts. C) the marginal cost of producing the third polo shirt will increase to $20. D) consumers will buy no polo shirts.
Suppose the market supply curve is p = 5 + Q. If price increases from 10 to 15, the change in producer surplus is
A) 12.5. B) 5. C) 50. D) 37.5.