How do economists define the time period known as the long run?
What will be an ideal response?
The long run is the period of time for which there are no fixed factors of production. Firms can increase or decrease their scale of operation, and firms can enter or exit the industry.
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If a product has an external benefit, how does its marginal private benefit compare to its marginal social benefit?
A) Marginal private benefit is less than marginal social benefit. B) Marginal private benefit is greater than marginal social benefit. C) At low quantities, marginal private benefit is less than marginal social benefit but at high quantities, marginal private benefit is greater than marginal social benefit. D) At low quantities, marginal private benefit is greater than marginal social benefit but at high quantities, marginal private benefit is less than marginal social benefit. E) Marginal private benefit cannot be compared to marginal social benefit.
Will a perfectly competitive firm ever produce in the short run even though it is incurring an economic loss?
What will be an ideal response?
Refer to the accompanying table. If the price of a t-shirt is $10 and the price of a sweater is $40, then the rational spending is satisfied when the consumer purchases ________ t-shirts and ________ sweaters.UnitsUtils Per Year from T-shirtsUtils Per Year from Sweaters0001754002135720318096042101120
A. 4; 4 B. 3; 2 C. 2; 3 D. 1; 4
Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?
What will be an ideal response?