Explain why companies that choose low-pollution technologies will find it hard to survive in a competitive industry.
What will be an ideal response?
In order to survive in a competitive industry, a firm must operate at minimum average cost in the long run. It is unlikely that the lowest cost technology is a low-polluting technology. Typically, it costs more to produce using a low-polluting technology. Hence, the firm that chooses the low-polluting technology will incur costs above minimum average cost, and so will not survive in a competitive industry in the long run.
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The use of foreign money instead of domestic money when the domestic economy has a high rate of inflation is called _____
a. currency depreciation b. currency substitution c. capital flight d. currency devaluation e. currency trade
In this graph, what is the total loss?
a. $75
b. $80
c. $85
d. $90
Which is an example of a good with an elastic supply?
a. beef b. bananas c. lumber d. click-top pens
Refer to Figure 22.3 for a perfectly competitive firm. Which of the following statements is true for this firm between the prices of $10 and $15?
A. The firm is experiencing economic losses but should continue to produce. B. The firm is experiencing economic losses and should shut down. C. The firm is experiencing zero economic profits. D. The firm is experiencing economic profits because the market price is greater than or equal to the minimum AVC.