Assume a purely competitive firm is maximizing profit at some output at which long-run average total cost is at a minimum. Then:
A. the firm is earning an economic profit.
B. there is no tendency for the firm's industry to expand or contract.
C. allocative but not productive efficiency is being achieved.
D. other firms will enter this industry.
Answer: B
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Which of the following is one explanation as to why the aggregate demand curve slopes downward?
A) Decreases in the price level raise the interest rate and increase consumption spending. B) Decreases in the price level raise the interest rate and increase investment spending. C) Decreases in the price level raise real wealth and increase consumption spending. D) Decreases in the U.S. price level relative to the price level in other countries lower net exports.
The Lorenz curve represents the distribution of income
a. True b. False Indicate whether the statement is true or false
One reason why the smaller oligopolistic firms accept godfather pricing in unbalanced oligopoly is because they can
a. differentiate their products more fully in order to increase market power b. engage in mergers if the godfather chooses the wrong price c. together influence the price leader (godfather firm) to share industry profit more equally d. enjoy a higher economic profit than they would otherwise e. survive a price war without too many losses
According to many modern monetarists, the government can minimize economic instability by stabilizing growth of the __________.
Fill in the blank(s) with the appropriate word(s).