MACROECONOMICS-W/MINDTAP
15th Edition
ISBN: 9781305361409
Author: Gwartney
Publisher: CENGAGE L
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Question
Chapter ST6, Problem 1CQ
To determine
The stock market crash in 1929.
Expert Solution & Answer
Explanation of Solution
During 1920s, the stock market grows up rapidly. It hits the history of growth and achieves its peak level. Due to this rapid growth, many normal consumers will bring a large number of stocks. This is because they expected a huge profit from it. However, they do not have an adequate cash balance with them to purchase it. Then they buy it from its margin and take loan from the banks or some from the brokers. However, these excess flow of money in the economy will force the Federal Reserve to increase the interest rate and to protect the gold standard in the bank of Country E to raise their rates. The Wall Street journal makes features about the marginal buyers of stock, Leading to create a panic situation and form a bear market. These worsen the situations and lead to a stock market crash. This is considered as a main reason of great depression in Country U.
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Students have asked these similar questions
Wolfgang is a typical producer in a perfectly
competitive piano industry (i.e., all other producers of
pianos face the same costs as Wolfgang). The
following production and cost data apply to the long run
as well as the short run. Fixed costs (rent) are
unrecoverable in the short run and are equal to $2400
per month. Variable costs consist of raw
materials (wire, wood, plastic), which cost $1000
per piano, and the $40 per hour opportunity cost
of Wolfgang's time. Wolfgang's production function is
given in the table at right.
Wolfgang will shut down if the price per piano is less
than
OA. $3000.
B. $4000.
O C. $5000.
○ D. None of the above.
Pianos (Q)
Hours (L)
Raw Materials (
0
0
0
1
100
1000
2
150
2000
3
240
3000
4
400
4000
P2
P₁
$ per unit
Using the graph below, determine which statement is TRUE.
MC1
SRATC₁
Q1
Q₂
MC2 SRATC2
LRAC
✓ LEA
Quantity
Using the grapns below, wnicn snow the snort-run cost curves for 3 perfectly competitive firms in the same industry, determine whether the industry is in long-run equilibrium or not.
Q
Q
Firm A
QA
MC
ATC
Output
Firm B
QB
MC
ATC
Firm C
MC
ATC
Output
Output
Qc
If Firms A, B and C are in the same industry, is this industry in long-run equilibrium?
○ A. Yes, because P = MC = MR for each of the 3 firms.
○ B. No, because Firm A is not producing at a profit-maximizing level of output.
○ C. Yes, because all 3 firms are producing at their minimum average total cost.
OD. The answer is uncertain since it's unknown whether the firms are producing at the minimum efficient scale or not.
○ E. No, because if the industry were in equilibrium, all 3 firms would be earning zero economic profits.
Chapter ST6 Solutions
MACROECONOMICS-W/MINDTAP
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