The fact that a perfectly competitive firm's total revenue curve is an upward-sloping straight line implies that
A. The total profit curve is also an upward-sloping straight line.
B. Product price increases at all output levels.
C. Product price decreases as output increases, and demand is elastic.
D. Product price is constant at all levels of output.
Answer: D
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With its current levels of input use, a firm's MRTS is 3 (when capital is on the vertical axis and labor is on the horizontal axis). This implies
A) the firm could produce 3 more units of output if it increased its use of capital by one unit (holding labor constant). B) the firm could produce 3 more units of output if it increased its use of labor by one unit (holding capital constant). C) if the firm reduced its capital stock by one unit, it would have to hire 3 more workers to maintain its current level of output. D) if it used one more unit of both capital and labor, the firm could produce 3 more units of output. E) the marginal product of labor is 3 times the marginal product of capital.
There are fewest problems in distinguishing between which two market structures?
a. oligopoly and monopolistic competition b. monopolistic competition and perfect competition c. monopoly and perfect competition d. oligopoly and monopoly e. oligopoly and perfect competition
According to the text, which of the following factors may make the theory of purchasing power parity unrealistic?
A) Trading countries may stop exchanging goods once prices between them equalize. B) Shipping, insurance, and transaction costs may reduce the implication of purchasing power parity. C) Prices may not equalize if goods arbitrage is reduced by trade barriers. D) The effects of purchasing power parity may not show up until many years have passed.
Along the portion of the consumption function that lies above the 45-degree line, saving is
A. equal to consumption. B. positive. C. negative. D. equal to zero.