Which of the following would most likely happen in the short run if P dropped slightly below the dotted line?
a. The firm would shut down.
b. The firm would exit the market.
c. The firm would stay open.
d. The firm would expand.
a. The firm would shut down.
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The region of the U.S. with the highest poverty rate is the Midwest
Indicate whether the statement is true or false
Which of the following is not correct?
a. An increase in income shifts a consumer's budget constraint outward. b. An increase in the price of good X causes a consumer's budget constraint to rotate inward along the X axis. c. A decrease in the price of good Y causes a consumer's budget constraint to rotate outward along the Y axis. d. Changes in income affect the slope of the budget constraint as well as its location on a graph.
The tobacco industry has a Lerner index of 0.76. Based on this information, compute the optimal markup factor.
A. 0.24 times price B. 4.17 times price C. 4.17 times marginal cost D. There is not sufficient information to determine the optimal markup factor.
Explain intuitively why the market for a nonexcludable good fails to provide an efficient quantity.
What will be an ideal response?