Barb Dwyer notices that during economic downturns, such as recessions, the prices tend to decrease at least for the duration of these economic events. Barry Cade notices that the price of many items that he uses on a regular basis has steadily been increasing over the past ten years. Anne Teak notices that her government has taken to printing money in trillion dollar bills in order to make everyday transactions easier. Bill Board notices that his rent for this year has increased, but not as much as it had increased last year.

Barb Dwyer notices that during economic downturns, such as recessions, the prices tend to decrease at least for the duration of these economic events. Barry Cade notices that the price of many items that he uses on a regular basis has steadily been increasing over the past ten years. Anne Teak notices that her government has taken to printing money in trillion dollar bills in order to make everyday transactions easier. Bill Board notices that his rent for this year has increased, but not as much as it had increased last year.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter5: Supply, Demand, And Price: Applications

Section5.9: Application 9: Easier To Obtain Loans And Higher Housing Prices

Problem 2ST

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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 price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will(FALL, RISE, OR REMAIN THE SAME) , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by (REDUCING OR INCREASING) the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to (RISE ABOVE OR FALL BELOW)…
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 price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in the short run.
Oil company cutbacks may raise gas prices down the road By slashing new investment and production, the oil industry is sowing the seeds for a sharp rise in the price of gasoline once demand picks up as the economy recovers from the recession. After hitting $147 in July, 2008, crude oil prices have dropped by 70 percent. Dozens of projects, including oil fields from West Texas to Russia and oil-sands projects in Canada, have been put off. Many traditional oil fields can be profitable with crude oil at $30 to $40 a barrel, but unconventional drilling is more expensive. New oil-sands projects in Canada, for example, require oil prices of about $80 a barrel. Source USA Today, March 3, 2009 How does a fall in the price of crude oil change the supply of oil? If the price rises back to $80 a barrel, how will investment and production of oil change? The 70 percent fall in the price of crude oil of oil Search OA. decreases the quantity of oil supplied; decrease OB. decreases the supply of oil…
In the short run, the quantity of output supplied by firms can deviate from the natural level of output if the actual price level deviates from the expected price level in the economy. A number of theories explain reasons why 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 price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will (decrease/not change/increase) , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by (raising/lowering) the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to (fall short of/exceed) the…
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landlords show up at the next council meeting and demand an increase in rents.the council members vote to repeal the price ceiling and instead replace it with a price floor that is RM 50 above the equilibrium price. what is the new market price? how many two-bedroom apartments will be rented? can you draw the graph for this quetion(3c)