Which is necessarily true for a purely competitive firm in short-run equilibrium?
A. Marginal revenue less marginal cost equals zero.
B. Marginal revenue is zero.
C. Price less average total cost equals zero.
D. Total revenue less total cost equals zero.
Answer: A
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If real GDP per person rises above the subsistence level then, according to classical growth theory,
A) a population explosion will occur. B) labor productivity growth permanently increases. C) population growth will slow down. D) real GDP per person will fall below the subsistence level. E) real GDP per person will remain above the subsistence level.
Refer to Figure 13-17. In the long run, why will the firm produce Qf units and not Qg units, which has a lower its average cost of production?
A) At Qg, marginal revenue is less than average revenue which will result in a loss for the firm. B) Although its average cost of production is lower when the firm produces Qg units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss. C) At Qg, average cost exceeds marginal cost so the firm will actually make a loss. D) The firm's goal is to charge a high price and make a small profit rather than a low price and no profit.
Vacation tours to Europe invariably package visits to disparate regions: cities, mountains, and the seaside. Bundling, a type of second degree price discrimination, is most profitable when:
a. the preference rankings of vacationers travelling together are negatively correlated. b. a preference for cities is always higher than preferences for mountain vistas. c. preference rankings of vacationers travelling together are positively correlated. d. preference for the seaside is always higher than preferences for city excursions. e. no one wants to take a European vacation package to cities, mountains, and the seaside.
A decrease in a supply of oil could ____
a) increase long-run aggregate-supply. b) decrease long-run aggregate-supply. c) have no impact on long-run aggregate-supply. d) increase aggregate-demand.