Joe's Juice Shop operates in a monopolistically competitive market. Joe's is currently producing where its average total cost is minimized. In the long run we would expect Joe's output to
a. decrease and average total cost to increase.
b. decrease and average total cost to decrease.
c. remain unchanged as Joe's is doing the best it can.
d. increase and average total costs to decrease.
a
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As the tax wedge associated with a given economic activity gets smaller, we would expect
A) more of that economic activity to occur. B) people to engage in less of that particular activity. C) the distortions caused by taxes on that activity to be greater. D) no change in the practice of that activity until the tax wedge ultimately disappears.
In both monopolistically competitive and perfectly competitive industries
A) firms produce products for which there are no close substitutes. B) firms are price takers. C) there are high barriers to entry. D) there are many buyers and sellers.
Which of the following represents a capital budgeting problem for multinational corporations but not for domestic corporations?
A) determining the cost of capital B) calculating after-tax cash flows C) selecting the appropriate risk-adjusted rates of return D) None of the above
The demand for good X is estimated to be Qxd = 10, 000 ? 4PX + 5PY + 2M + AX, where PX is the price of X, PY is the price of good Y, M is income, and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, we know that the demand for good X is:
A. inelastic. B. elastic. C. unitary elastic. D. neither elastic, inelastic, nor unitary elastic.