In the long run, a perfectly competitive market produces at ________, whereas the monopolistic competitive firm does not
A) the output at which the lowest average total cost of production is reached
B) an output level at which positive economic profits exist
C) zero economic profits
D) the point at which MR = MC=ATC
Answer: A
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Purchasing power parity can be used as
A) a long-run gauge, but in the short run large deviations in currency values can exist. B) a short-term gauge, but in the long run large deviations in currency values can exist. C) an indicator of how interest rates will change in the short run. D) an indicator of how interest rates will change in the long run. E) a short-term and long-term gauge of relative currency values.
With economies of scale, a firm can continue to lower its cost per unit by increasing output
a. without limit b. up to the minimum efficient scale c. until the firm is meeting market demand single-handedly d. to some point between the minimum efficient scale and the market demand curve e. halfway to the minimum efficient scale
At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his or her marginal cost curve upward sloping, the monopolist
A. is producing his or her profit-maximizing level of output. B. could increase his or her profit by increasing his or her output. C. could increase his or her profit by increasing his or her price. D. should exit the market if he or she has positive fixed cost.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.