Consider a firm operating with the following: price = 10; MR = 10; MC = 10; ATC = 10. This firm is:
A. making an economic profit of 10.
B. an example of monopolistic competition.
C. perfectly competitive in long-run equilibrium.
D. a monopolist for a product with a relatively inelastic demand.
Answer: C
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An information product is a product for which
A) the first item is produced inexpensively but additional units are more costly to produce. B) the first unit is very costly to make but additional units are less costly to produce. C) the marginal cost first falls and then rises but the average total cost rises throughout its range. D) the average fixed cost first falls and then rises, but the average total cost falls throughout its range.
Tacit collusion occurs in industries that
a. are monopolistically competitive b. contain price leaders c. experience rapid technological change d. are regulated e. produce very differentiated products
An efficient allocation of resources is demonstrated by a point
a. above the production possibilities frontier. b. below the production possibilities frontier. c. on the production possibilities frontier. d. near the middle of the production possibilities frontier.
The market demand schedule in perfect competition is horizontal
a. True b. False Indicate whether the statement is true or false