Answer the following statement(s) true (T) or false (F)
1. In the long run, a competitive firm that experiences decreasing returns must earn negative profits after all factor shares are paid out.
2. Factors that are supplied relatively inelastically earn more rents than those supplied more elastically.
3. Both the competitive firm's demand curve for labor and the monopoly firm's demand curve for labor always slope downwards.
4. When production is subject to increasing returns to scale profit will be positive.
5. If demand for output rises, producers' surplus increases more for factors with elastic supply curves than for other factors.
1. False
2. True
3. True
4. False
5. False
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BioMed Pharmaceutical has held a patent on an important heart medication called Heartex, but the patent will expire in the coming year. After the patent expires, other firms can legally sell the same medication as a generic drug product
What will happens to the demand for Heartex and to the Lerner index for this product as the generic drugs enter the market? A) Demand becomes less elastic, Lerner index increases B) Demand becomes less elastic, Lerner index declines C) Demand becomes more elastic, Lerner index increases D) Demand becomes more elastic, Lerner index declines
Average cost
a. is always larger than marginal cost. b. declines for some range of output, hits a minimum, and then increases. c. is always smaller than marginal cost. d. is total cost/price of the product.
Suppose the supply of Malaysian rubber increases. If U.S. producers purchase this rubber as an input, in the United States, this would cause a
A) rightward shift of the AD curve. B) leftward shift of the AD curve. C) rightward shift of the SRAS curve. D) leftward shift of the SRAS curve.
Refer to the figure below, which shows four different Lorenz curves (I, II, III, and IV). Which point would indicate that the top 40% of households earned 60% of the nation's total income?
A. a
B. b
C. d
D. e