Suppose That an Increase in Population Increases Demand in New

question 73

Multiple Choice

Suppose that an increase in population increases demand in New Haven County's perfectly competitive market for auto repair.Which of the following is true in the short run?

• A)Auto repair centers may be able to earn economic profit.
• B)Normal profits increase.
• C)The market supply curve of auto repair services shifts to the left.
• D)Either price or output is likely to increase, but it's impossible to say which.
• E)After firms have had time to adjust to the new equilibrium, the price of auto repair services will exceed the marginal cost.

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Definitions:

Aggregate Demand

The total amount of goods and services that all consumers, companies, and the government are willing to buy at a given price level in an economy.

Recessions

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Automatic Stabilizers

Economic policies and programs designed to offset fluctuations in a nation's economic activity without the need for intervention by policymakers.

Expenditures

The amount of money spent on goods, services, or other expenses within a certain period.