Suppose that firms are located in a circle on an island. You are given transportation costs, fixed costs, variable costs, and demand (assume that customers are spread evenly along the circle). As the firm's variable costs rise,
A. the number of firms will rise in the long run.
B. the number of firms will stay the same in the long run.
C. the number of firms will fall in the long run.
D. It is impossible to tell from the information given.
Answer: B
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Which of the following is an example of an automatic fiscal policy action?
A) increased unemployment payments resulting from higher unemployment B) an increase in spending on defense goods resulting from increased world tensions C) an increase in the tax rate resulting from a desire to shrink the budget deficit D) a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession E) None of the above answers is correct.
Public goods create a free-rider problem because the quantity of the good that a person consumes ________ for that good
A) does not depend on the amount that the person pays B) increases as that person pays less C) increases as that person pays more D) decreases as that person pays more
The above table shows the total product schedule for the campus book store. If each employee is paid $6 per hour and there are no other variable costs, then at what level of books sold per hour does the marginal cost begin to increase?
A) 41 books per hour B) 59 books per hour C) 73 books per hour D) 90 books per hour
In the model of monopolistic competition, compared to a firm with a higher marginal cost, a firm with a lower marginal cost will set a ________ price, produce ________ output, and earn ________ profits
A) lower; more; more B) higher; more; more C) lower; less; less D) higher; less; less E) higher; less; more