The figure above shows the costs for the typical grower in the perfectly competitive turnip market. Currently, the price of a ton of turnips is $1,200. The demand for turnips increases permanently
The turnip industry experiences neither external economies nor external diseconomies. In the long run, the price of a ton of turnips ________. A) increases so it is above $1,200
B) is $1,200 and turnip growers will make normal profit
C) decreases so it is below $1,200, and turnip growers will make normal profit
D) decreases so it is below $1,200 and the turnip growers make an economic profit
B
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If the pricing of one firm is partially influenced by what it thinks another firm will do, the two firms are
A) interdependent. B) bundled. C) tied. D) independent.
Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy. If the Fed uses monetary policy successfully to keep real GDP at its potential level in 2017, which of the following will be higher than if the Fed had taken no action?
A) Real GDP and then inflation rate B) real GDP and the unemployment rate C) real GDP and potential GDP D) potential GDP and the inflation rate