The long-run supply curve for a competitive industry
a. may be horizontal if entry into the industry lowers average total cost.
b. may be upward-sloping if higher-cost firms enter the industry.
c. will be horizontal if there is free entry into the industry.
d. will be upward-sloping if there are barriers to entry into the industry.
b
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The irrelevance of monetary changes for real variables is called monetary neutrality. Most economists accept monetary neutrality as a good description of the economy in the long run, but not the short run
a. True b. False Indicate whether the statement is true or false
Answer the following statements true (T) or false (F)
1. The quantity supplied is inversely related to price. 2. If demand and supply increase by the same amount, equilibrium price will rise. 3. If supply increases more than demand, equilibrium price will fall. 4. A change in demand occurs whenever consumers will purchase more because of a decrease in price. 5. An increase in demand tends to increase both the equilibrium price and the amount of a commodity exchanged.