Draw a graph illustrating a competitive firm in short-run equilibrium that is earning an economic profit. Be sure to label all curves and axes correctly.
What will be an ideal response?
The diagram should look like Figure 10-2 in the text. Note that price must be higher than the minimum of average cost.
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Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect.
Assuming equilibrium price P1, consumer surplus is represented by areas
A. a + c. B. a + b + c + d. C. c + d. D. a + b.
Holding everything else constant, if total factor productivity increases, the debt-to-GDP ratio will ________, and if the labor force growth rate increases, the debt-to-GDP ratio will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a
a. 0.0625 percent increase in the quantity demanded. b. 4 percent increase in the quantity demanded c. 5 percent increase in the quantity demanded. d. 80 percent increase in the quantity demanded.
If a firm's output equals 10, product price equals $5.00, TFC = $8.00, and TVC = $60.00, then the firm's profit would equal
a. $.80 b. $1.80 c. $80.00 d. –$16.80 e. –$18.00