If expansion of an industry's output causes a downward shift of firms' average total cost curves,
a. each firm earns a long-run economic profit
b. all of the following are correct
c. there will be long-run economic profits
d. it is a decreasing-cost industry
e. it is an increasing-cost industry
D
You might also like to view...
If the marginal rate of technical substitution of labor for capital (MRTSLK) exceeds the relative price of labor in terms of capital (PL/PK), then
a. the firm's long-run average cost curve is rising. b. the firm is producing its output at the least possible cost, but the firm should reduce its output level to increase its profits. c. the firm has increased its output level beyond the point of diminishing marginal returns. d. the firm needs to use less capital and more labor to reach its expansion path.
What is the best inference about the impact of a decrease in transportation costs?
a. The demand and supply curves will shift out, which will increase quantities of goods. b. The supply curve will shift out, which will lead to lower prices to consumers. c. Farmers will earn a smaller share of the selling price of their crops. d. The demand curve will shift out, which will lead to higher prices and quantities of goods.
Deflation:
a. was prevalent during the oil shocks of the 1970s. b. will cause consumers' purchasing power to shrink. c. has been persistent in the U.S. economy since the Great Depression. d. none of these.
Related to the Economics in Practice on page 292: The smart phone industry is best characterized as
A. an oligopoly. B. a monopoly. C. monopolistically competitive. D. purely competitive.