Suppose that the firms in the perfectly competitive oat industry are currently receiving a price of $2 per bushel for their product and there are constant returns to scale. The minimum possible average total cost of producing oats in the long run is $1 per bushel. Other things being equal, it follows that:
A. the price of oats will be $1 in the long run.
B. the price of oats will be somewhere between $1 and $2 in the long run.
C. it is not possible to determine the price of oats in the long run from the information given.
D. the price of oats will be $2 in the long run.
Answer: A
You might also like to view...
The theory that explains the shift of color TV sets production from the United States to Japan and Taiwan is called the _____ theory
a. productivity difference b. factor abundance c. product life cycle d. preference e. human skills
The greater the degree of economic integration between markets in the home country and the base country:
A) the greater the volume of transactions and the greater the benefit to the home country of fixed exchange rates. B) the smaller the volume of transactions and the lesser the benefit to the home country of fixed exchange rates. C) the greater the volume of transactions and the greater the benefit to the home country of flexible exchange rates. D) the less important the volume of transactions and the greater the importance of ethnic similarities.
If the demand for farm products is price inelastic, a good harvest will cause farm revenues to:
A. increase. B. decrease. C. be unchanged. D. either increase or decrease, depending on what happens to supply.
Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.
Figure 16.4Refer to Figure 16.4. Suppose the government assigns property rights to ________. No negotiations
occur between the parties. The resulting level of air travel is 0 units. A. the airlines B. the residents of Playa Del Rey C. both the airlines and the residents of Playa Del Rey in a 50-50 split D. indeterminate from the given information.