If a price floor is a binding constraint on a market, then
a. the equilibrium price must be above the price floor.
b. the quantity demanded must exceed the quantity supplied.
c. sellers cannot sell all they want to sell at the price floor.
d. buyers cannot buy all they want to buy at the price floor.
c
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If a firm experiences economies of scale as it expands production, then:
a. it is not subject to diminishing returns. b. its marginal cost curve will be downward sloping in that range. c. its marginal product curve will be downward sloping in that range. d. its long-run average total cost curve will be downward sloping in that range.
In long-run equilibrium, a monopolistically competitive firm achieves optimal productive efficiency but not optimal allocative efficiency.
Answer the following statement true (T) or false (F)
You should do this problem in three steps. First: Fill in Table 1. Assume fixed cost is $1000 and price is $575. Second: Draw a graph of the firm's demand, marginal revenue, average variable cost, average total cost, and marginal cost curves on a piece of graph paper. Be sure to label the graph correctly. On the graph, indicate the break-even and shutdown points and the firm's short-run and long-run supply curves. Third: Calculate total profit in the space below, then answer questions a through d. (a) The minimum price the firm will accept in the short run is $_______. (b) The minimum price the firm will accept in the long run is $_______. (c) The output at which the firm will maximize profits is _______. (d) The output at which the firm will operate most efficiently is ________.
Table 1:
Table 2:
Interest rates are positive because
A. people prefer future consumption over current consumption. B. usury laws require rates to be very high. C. banks are not competitive. D. people prefer current consumption over future consumption.