The figure below depicts the short-run market equilibrium in a perfectly competitive market and the cost curves for a representative firm in that market. Assume that all firms in this market have identical cost curves.
Given that the current equilibrium price is $8, what will happen to the number of firms in this market in the long run?
A. It is impossible to determine whether the number of firms in this market will rise or fall.
B. The number of firms in the market will rise as firms enter the market in response to positive economic profit.
C. The number of firms in the market will fall as firms exit the market in response to negative economic profit.
D. The number of firms in the market will not change unless there is a change in either demand or in the cost of production.
Answer: B
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What will be an ideal response?
Subsidizing coal mining and orange growing have both been found to be economically inefficient in that the costs outweigh the benefits. However, a subsidy on coal mining would help the coal producers in West Virginia and a subsidy on orange growing would help the orange farmers in Florida. So the senator from West Virginia approaches the senator from Florida and says that he will vote for the
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If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Qd = 500 - 10P, the monopolist maximizes profit by producing:
A. 500 units of output. B. 187.5 units of output. C. 250 units of output. D. 300 units of output.
Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 
Refer to Table 8.2. If Sherry produces one pair of earrings, her total variable costs are
A. $50. B. $100. C. $150. D. indeterminate from this information.