Refer to the graph shown. Suppose the market price is $3. At this price, a perfectly competitive firm should:
A. continue to produce in both the short run and the long run.
B. shut down in the short run but continue production in the long run.
C. shut down immediately.
D. continue to produce in the short run but shut down in the long run.
Answer: C
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Some economists have predicted that recent developments in energy production in the United States are estimated to result in all of the following EXCEPT:
A) millions of new jobs B) the United States having the lowest energy costs of any country in the industrialized world C) a substantial increase in GDP over time D) significant increases in pollution
If we observe firms earning zero economic profits in the short run, we know that
A) the industry must be perfectly competitive. B) the industry must be either perfectly competitive or monopolistically competitive. C) there must not be any barriers to entry. D) any market structure is possible since firms under any market structure can earn zero profits at some time.
Accumulating debt poses a problem for the U.S. federal government because
A) it is currently in danger of defaulting on the debt. B) a large debt-to-GDP ratio causes crowding out. C) building roads and bridges do not yield enough benefits to justify their cost. D) the debt has to ultimately be paid off.
In order for a price ceiling to "bind," it:
A. must be set below the equilibrium price, and will likely cause a surplus. B. must be set above the equilibrium price, and will likely cause a surplus. C. must be set above the equilibrium price, and will likely cause a shortage. D. must be set below the equilibrium price, and will likely cause a shortage.