Short-run average cost exceeds long-run average cost only when there are economies of scale
Indicate whether the statement is true or false
False. Short-run average costs exceed long-run average costs because the firm is locked into a certain input mix in the short run that may not be cost minimizing when all inputs are variable. This condition holds regardless of the presence of economies of scale.
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When the government prohibits certain kinds of market behavior such as monopoly and monopolistic practices it generally does so through
A) regulatory agencies such as the Interstate Commerce Commission or the Federal Communications Commission. B) antitrust law. C) the police powers of the states. D) use of the capture theory of regulation.
Which of the following statements is correct about the demand curve of the perfectly competitive industry?
A) The demand curve of the perfectly competitive industry is horizontal as are the demand curves facing the individual firms. B) The market demand curve of perfect competition is vertical because the individual consumers are buying a homogeneous product. C) The market demand curve of the perfectly competitive industry is downward sloping while the demand curve facing an individual firm is horizontal. D) The market demand curve of the perfectly competitive industry is downward sloping, so the demand curves of the individual firms are also downward sloping.
Demand is said to be inelastic when
A) a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded. B) demand exhibits zero responsiveness to price changes. C) small price increases will lead to zero quantity demanded. D) a given percentage change in price will result in a greater than proportionate percentage change in the quantity demanded.
Bay and Amazon provide "sellers' ratings" information based on the experiences of past buyers. This is to help resolve the adverse selection problem faced by potential buyers.
a. true b. false