If a firm faces a downward-sloping demand curve, then:
A. the firm could be either a perfectly competitive firm or an imperfectly firm.
B. it is a perfectly competitive firm.
C. the firm's marginal revenue from selling an additional unit of output is less than price.
D. the firm's production process exhibits economies of scale.
Answer: C
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As output increases, marginal cost will eventually
A) increase because of the law of increasing returns. B) increase because of the law of diminishing returns. C) decrease because of the law of diminishing returns. D) decrease because of the law of increasing returns.
Jan is a hyperbolic discounter. She puts weight 1 on utility earned in the current period but only weight .5 on utility earned in future periods. In period 1 she comes up with a plan, which involves taking some action that leads to a loss of C utils in period 2 but provides a benefit of B utils in period 3 . What values of B and C will lead her to behave inconsistently and not follow through on
her plans? a. C < B < 2C. b. B < C. c. B > 2C. d. B < C < 2B.
Bailey's Barber Shop knows that a 5% increase in the price of their haircuts results in a 15% decrease in the number of haircuts purchased. What is the elasticity of demand facing Bailey's Barber Shop?
a. 0.05 b. 0.10 c. 0.33 d. 3.0
Does a competitive firm have the ability to influence the quantity of output it supplies? Does it have the ability to influence its average revenue?