The market for a perfectly competitive industry clears at a price of $3, and the minimum average cost for all firms is $2.50. In the long run, we would expect an increase in
A. each firm’s output.
B. the number of firms.
C. each firm’s profit.
D. each firm’s average cost.
Answer: B
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Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS-AD model shows this process as
A) rightward shifts in the short-run aggregate supply curve. B) rightward shifts in the both the aggregate demand and long-run aggregate supply curves. C) movements upward along the aggregate demand curve. D) rightward shifts in the aggregate demand curve and leftward shifts in the short-run aggregate supply curve.
Which statement is false?
A. The 1961 electrical machinery anti-trust case is an example of covert collusion. B. Two of the companies involved in the electrical machinery case were charged with price fixing on turbine generators 11 years after being convicted of price fixing and illegal market-sharing. C. The conviction of high-ranking company executives in the 1961 electrical machinery case effectively ended covert conspiracies in this country. D. In 1996 the Archer Daniels Midland Company pleaded guilty and paid a $100 million criminal fine for its role in two international conspiracies to fix prices and eliminate competition in the lysine and citric acid markets.
A firm can invest in one of two projects: the purchase of new manufacturing equipment or the training of its factory workers in the better use of time management. Both projects cost the same amount of money. The purchase of new manufacturing equipment is expected to reduce costs by $10,000 each year for 5 years. The training of the factory workers in the better use of time management is expected to increase revenues by $10,000 each year for 10 years. Which of the following is true?
A. Each of these projects would have the same expected rate of return, as they both cost the same. B. The training of factory workers would have the higher expected rate of return, as it will increase revenues for a longer time period than the purchase of new manufacturing equipment will reduce costs. C. The purchase of new manufacturing equipment would have the higher expected rate of return, as it reduces costs whereas the training of factory workers in the better use of time management only increases revenues. D. The expected rates of return for these two projects cannot be compared, as one project reduces costs and the other increases revenues.
Suppose Jason takes $150 he had in his wallet and deposits it into his checking account. The immediate result of this transaction is that M1
A. Increases by $150 and M2 remains the same. B. And M2 do not change. C. Remains the same and M2 increases by $150. D. Decreases by $150 and M2 remains the same.