If a perfectly competitive firm shuts down in the short run and exits the industry in the long run, the firm's short run condition is
A. TR > TC.
B. TR > TVC and TR < TC.
C. TR < TVC.
D. TR < TFC.
Answer: C
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If a firm in a perfectly competitive industry is producing at a point where TR equals TC and the market demand increases, then the firm will be making
a. economic profits; it will expand output. b. economic profits; output will not change. c. normal profits; output will expand. d. normal profits; output will not change.
The marginal revenue product of capital is the
a. same as the marginal revenue product of labor if all resources are used b. same as the marginal physical product of capital in a perfectly competitive market c. change in the interest rate when a firm borrows $1 to buy new capital d. change in total revenue generated by an additional $1 of loanable funds e. price of adding one more machine to production
Which of the following statements is true?
a. Base year prices are necessarily higher than current year prices. b. The CPI in the base year is always 100. c. If the CPI is 112 in year 1 and 123 in year 2, prices have risen by approximately 9.8 percent between the two years. d. b and c e. a, b, and c
Which of the following is not true about the marginal propensity to consume?
A. It is equal to the slope of the consumption function. B. It is equal to the change in consumption divided by the change in disposable income. C. It is always equal to or greater than 1. D. It is equal to 1 - MPS.