Which of the following does not describe how the allocating function of price determines long-run equilibrium...
Which of the following does not describe how the allocating function of price determines long-run equilibrium quantity? The change in market price provides an incentive for consumers to change their quantity of consumption and for producers to redistribute their resources. Producers respond to an increase in demand by allocating a greater amount of resources to production due to the increased profitability of the product. Consumers respond to an increase in supply by substituting away from other goods due to the relative price decrease. All of the above accurately describe the long-run process.
Homework Answers
From the given options there is no one which does not describe how the allocating function of function of price determines long run equilibrium quantity, All of the above accurately describe the long-run process. Hence, option(D) is correct.
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Which of the following does not describe how the allocating
function of price determines long-run equilibrium...
Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound...
Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 350 million pounds per year. Suppose that WebMD claims that a protein found in shrimp will increase your expected life span by 5 years.WebMD's claim will cause consumers to demand _______ shrimp at every price. In the short run, firms will respond by _______ .Shift the demand curve, the supply curve, or both on the following diagram to...
QUESTION 25 Which of the following best describes the long run in terms of aggregate supply?...
QUESTION 25 Which of the following best describes the long run in terms of aggregate supply? a. The long-run aggregate supply curve is horizontal. b. The long-run aggregate supply slopes upwards, but is NOT vertical. c. The long-run aggregate supply slopes downwards. d. The long-run aggregate supply curve is vertical. Question 39 Which of the following best characterizes market equilibrium? a. when there is no incentive for consumers or producers to change their current behaviour b. when producers earn profits...
1.) Why does a long-run average cost curve with a clear minimum point allow fewer firms...
1.) Why does a long-run average cost curve with a clear minimum point allow fewer firms to compete? Select the correct answer below: a. any firm producing at a different quantity from a clear minimum point will have higher costs. b. any firm that produces the same quantity from a clear minimum point will have higher costs. c. any firm producing at a different quantity from a clear minimum point will have lower costs. d. any firm that produces the...
The following graph shows the economy in long-run equilibrium atthe expected price level of 120...
The following graph shows the economy in long-run equilibrium at
the expected price level of 120 and the natural level of output of
$600 billion. Suppose a sudden and severe contraction in the
housing market reduces the value of homes and causes consumers to
spend less.Shift the short-run aggregate supply (AS) curve or the aggregate
demand (AD) curve to show the short-run impact of
the housing market slump.In the short run, the decrease in consumption spending
associated with the housing...
8. Economic fluctuations I The following graph shows the economy in long-run equilibrium at the e...
8. Economic fluctuations I The following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural level of output of $600 billion. Suppose a stock market boom increases household wealth and causes consumers to spend more. Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the stock market boom. In the short run, the increase in consumption spending associated with the stock market expansion causes the...
6. Why the aggregate supply curve slopes upward in the short run In the short run,...
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a...
Need detailed explanations for short-run and long-run equilibrium. 3. For each of the following scenarios, describe...
Need detailed explanations for short-run
and long-run equilibrium.
3. For each of the following scenarios, describe the effect on the AD curve, the SRAS curve, and the LRAS curve. Identify whether the effect causes a shift of the curve or a movement along the curve and identify the direction of the shift or the movement. Answer these questions on your assignment paper. a. An increase in the money supply causes interest rates to fall. b. The price of commodities (production...
Economics chart The following graph shows the economy in long-run equilibrium at the price level of...
Economics chart The following graph shows the economy in long-run equilibrium at the price level of 120 and potential output of $300 billion. Suppose several foreign economies experience severe recessions, causing foreign purchases of domestic goods and services to decline sharply. Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the economic turmoil abroad. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if...
1. Which of the following is not a property of the aggregate demand curve? It shows...
1. Which of the following is not a property of the aggregate demand curve? It shows the relationship between the overall price level and level consumption. It shows the price level on the vertical axis and output on the horizontal axis. The aggregate demand curve slopes downward. It shows the relationship between the overall price level and the level of total demand. 2. When the price level increases people: feel more wealthy. have the same real value of assets, regardless...
15. Which of the following is a true statement about the difference between a price-taker firm and a competitive price-s...
15. Which of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run (more than one answer is correct)? a. Both will sell their products at a price equal to average total cost, but only the price-searcher will produce at minimum average total cost. b. Both will sell their products at a price equal to marginal cost, and only the competitive price searcher will produce at minimum average...
The following graph shows the economy in long-run equilibrium at
the expected price level of 120 and the natural level of output of
$600 billion. Suppose a sudden and severe contraction in the
housing market reduces the value of homes and causes consumers to
spend less.Shift the short-run aggregate supply (AS) curve or the aggregate
demand (AD) curve to show the short-run impact of
the housing market slump.In the short run, the decrease in consumption spending
associated with the housing...
Need detailed explanations for short-run
and long-run equilibrium.
3. For each of the following scenarios, describe the effect on the AD curve, the SRAS curve, and the LRAS curve. Identify whether the effect causes a shift of the curve or a movement along the curve and identify the direction of the shift or the movement. Answer these questions on your assignment paper. a. An increase in the money supply causes interest rates to fall. b. The price of commodities (production...
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