The more elastic the demand facing a firm,
A) the higher the value of the Lerner index.
B) the lower the value of the Lerner index.
C) the less monopoly power it has.
D) the higher its profit.
B
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When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
A) any positive output the entrepreneur decides upon because all of it can be sold. B) nothing at all; the firm shuts down. C) the output where average total cost equals price. D) the output where marginal revenue equals marginal cost.
Using a graph of the classical labor market, illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage. What will eventually happen in this labor market if it is perfectly competitive?
What will be an ideal response?
Consider the following products. Which of them has the flattest demand curve?
A) insulin B) alcohol C) cigarettes D) butter
If the inflation rate in an economy is higher than expected, which of the following groups in the society would be most likely to gain?
a. Borrowers b. Lenders c. Persons holding large amounts of money d. Persons on fixed incomes e. Workers under contract without a cost of living adjustment