Explain why the long-run product price for a perfectly competitive firm will equal its minimum average total cost
What will be an ideal response?
Firms will seek profits and shun losses, and firms are free to enter and exit (in the purely competitive case). If the market price initially exceeds minimum ATC, the resulting profits will attract new firms to the industry, leading to an increased supply in the industry thus bringing back down the market price to the minimum ATC. Conversely, if the price is initially less than the minimum ATC, resulting losses will drive out firms, leading to a decrease in supply, thus bringing the price back up to the minimum ATC.
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Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per movie rental?
A) $2.00 B) $2.25 C) $2.50 D) $3.00
What is meant by strategic behavior?
What will be an ideal response?
A country's GNP will definitely exceed its GDP if ________ foreign companies produce in the country and ________ of the country's companies produce abroad.
A. many; none B. no; many C. no; none D. many; many
You spend $300 every month to keep your lawn and garden maintained. Your neighbor has told you that she derives $50 a month in enjoyment from being able to look at your beautiful yard. Which of the following is true?
A. You should refuse to spend anything on your yard unless your neighbor pays you $50 a month. B. If you took into consideration the benefits your neighbor derived, the efficient level of lawn maintenance would be less than $300 a month. C. If you took into consideration the benefits your neighbor derived, the efficient level of lawn maintenance would be greater than $300 a month. D. You are spending too much on your yard, because your neighbor derives only $50 worth of benefits.