Refer to the above figure. The firm that produces an output between Q1 to Q2 is experiencing
A. economies of scale.
B. constant returns to scale.
C. diseconomies of scale.
D. diminishing marginal product.
Answer: A
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At harvest time the supply of wheat is perfectly inelastic. If the government taxes wheat at $1 a bushel, then
A) the seller pays the entire tax. B) the buyer pays the entire tax. C) the seller and the buyer split the tax evenly. D) the seller and the buyer split the tax but the seller pays more. E) no one pays the tax because the wheat must be harvested or it will go to waste.
In its macroeconomic equilibrium, the economy can be producing at i. below full employment. ii. full employment. iii. above full employment
A) i only B) ii only C) iii only D) i or ii E) i, ii, or iii
If there are short-run profits in a competitive industry, will firms enter or exit over the long run? At what point will the final equilibrium be achieved?
What will be an ideal response?
Which of the following is not true of a perfectly competitive market?
a. Firms experience constant returns to scale. b. Firms face significant barriers to entry. c. Economic profit is zero. d. Each firm chooses the quantity it wants to sell. e. Each firm knows the prices of outputs and inputs.