Which of the following describes the relative positions of the demand curve and the average total cost (ATC) curve of a monopolistically competitive firm that earns a profit in the short run?
A) In the short run, the firm's demand curve will lie above its ATC curve. The demand curve will be tangent to the ATC curve in the long run.
B) In the short run, the firm's demand curve will lie below its ATC curve. The demand curve will be tangent to the ATC curve in the long run.
C) In the short run, the firm's ATC curve will cross the demand curve at the profit maximizing level of output. The demand curve will be tangent to the ATC curve in the long run.
D) In the short run, the firm's demand curve will cross its ATC curve at the ATC curve's lowest point. The demand curve will be above the ATC curve in the long run.
A
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On September 3, 2003, Universal Music Group announced plans to reduce the wholesale price of music CDs it distributes by an average of 25-30 percent. All else constant (i.e
, ignoring the effects of file-sharing programs), how would this change affect the retail market for new music CDs? A) Demand for CDs would increase, causing equilibrium price and quantity to increase. B) The supply of CDs would increase, causing equilibrium price to decrease and equilibrium quantity to increase. C) Demand for CDs would decrease, causing equilibrium price and quantity to decrease. D) The supply of CDs would decrease, causing equilibrium price to increase and equilibrium quantity to decrease.
Suppose you are the manager of Big Boards, a firm that produces particle board. To make your particle board, you purchase sawdust from timber farms. During the process of harvesting timber, both lumber and sawdust are produced. If the demand for lumber increases, this will cause the production of sawdust to ________ and the price of sawdust to ________.
A) decrease; fall B) increase; fall C) increase; rise D) decrease; rise
Which of the following is concerned primarily with mergers?
a. The Sherman Antitrust Act. b. The Clayton Act. c. The Robinson-Patman Act. d. The Celler-Kefauver Act.
What stage of the business cycle would be most appropriate to describe the years from 1929 to 1933?
(A) A contraction (B) A peak (C) An expansion (D) A trough