Which of the following is NOT a characteristic of long-run equilibrium for a perfectly competitive firm?
A. The firm produces the output level at which long-run average cost is at its minimum.
B. Economic profit is zero.
C. Price is greater than long-run average cost.
D. Price is equal to long-run marginal cost.
Answer: C
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If the price of chicken rises from $1.25 per pound to $1.75 per pound, if the demand curve is consistent with the law of demand, then the quantity of chicken demanded would be predicted to go from
A. 100 pounds to 125 pounds per day. B. 100 pounds to 75 pounds per day. C. 100 pounds to 100 pounds per day, because the price of chicken does not affect the quantity demanded. D. 100 pounds to 0 pounds per day, because consumers would stop purchasing chicken at a price above $1.25 per pound.
Which of the following about corporations is TRUE?
A) The cost of capital and labor is high relative to that paid by a proprietorship. B) Profits are taxed only once as the owners' income. C) The owners' entire wealth is at risk. D) Corporations' profits are taxed independently of their owners' incomes.
When a market is corrected for externalities, it:
A. is equitable. B. maximizes surplus. C. makes everyone in society better off. D. All of these statements are true.
A firm is considering three projects. Each costs $1 million now. Project A will yield $400,000 a year for three years, beginning one year from now. Project B will yield $1.25 million three years from now, and Project C will yield $600,000 for two years,
beginning two years from now. If the interest rate is 8 percent, which of these projects should the firm undertake? A) Project A B) Project B C) Project C D) none of these