Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2.
B. P3 and Y1.
C. P2 and Y2.
D. P2 and Y3.
Answer: D
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In its long-run equilibrium, a firm in monopolistic competition
A) makes zero economic profit and operates with excess capacity. B) makes zero economic profit and produces above capacity output. C) makes a positive economic profit and operates with excess capacity. D) makes a positive economic profit and produces above capacity output.
A perfectly competitive firm has a random demand with a 20 percent chance of being $10, a 20 percent chance of $16, and a 60 percent chance of being $20. What is the firm's expected marginal revenue?
A) $16.00 B) $16.40 C) $17.20 D) $15.20
A binding price ceiling is presented graphically as a(n):
a. price at equilibrium. b. price below equilibrium. c. price above equilibrium. d. inefficiently low quality of the good provided.
Refer to the above figure for the individual firm in a perfectly competitive market. If the firm's average costs are given by AC3, then
A. the industry supply curve will shift rightward. B. the industry demand curve will shift rightward. C. the industry supply curve will shift leftward. D. none of these.