If a firm in a perfectly competitive market faces the cost curves in the graph shown and produces at the profit-maximizing level of output, which of the following is true? A firm will:
A. plan to exit the industry in the long run if price falls below $15.
B. continue to operate in the short run if price is below $11.
C. make positive profits any time the price is greater than $11.
D. will earn maximum profits at a quantity of 35.
A. plan to exit the industry in the long run if price falls below $15.
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Refer to the scenario above. Suppose besides consuming all the potatoes grown on his farm, Edwin buys 5 pounds of potatoes at $0.80 per pound. What is likely to happen in this case?
A) GDP will increase by $4. B) GDP will remain unchanged. C) GDP will decrease by $0.80. D) Trade surplus will increase by $4.
The marginal revenue curve for a single-price monopoly
A) is horizontal. B) is upward sloping. C) lies above the market demand curve. D) lies below the market demand curve.
If the aggregate price level at time t is denoted by Pt, the inflation rate from time t - 1 to t is defined as
A) ?t = (Pt - Pt - 1)/Pt - 1. B) ?t = (Pt + 1 - Pt - 1)/Pt - 1. C) ?t = (Pt + 1 - Pt )/Pt. D) ?t = (Pt - Pt - 1)/Pt.
If polluters are forced to pay for their pollution, they will reduce pollution toward a socially optimal amount
a. True b. False Indicate whether the statement is true or false