The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces
A) 20 units of output and makes zero economic profit.
B) 20 units of output and incurs an economic loss.
C) 10 units of output and makes zero economic profit.
D) 10 units of output and incurs an economic loss.
D
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The law of supply states that, other things remaining the same,
A) demand increases when supply increases. B) if the price of a good increases, firms buy less of it. C) if the price of a good increases, the quantity supplied increases. D) as people's income increase, the supply of goods increases. E) if the price of a good increases, the supply increases.
For allocative efficiency to hold
A) average total cost is minimized in production. B) average variable cost is minimized in production. C) price must equal the marginal cost of the last unit produced. D) price must equal marginal revenue of the last unit sold.
Economists use the term "potential output" to refer to ________
A) a level of output that has not yet been achieved B) the maximum level of output of which an economy is capable C) the sum of finished goods plus goods in production that will be finished within the year D) the level of output that occurs when all prices are fully adjusted E) none of the above
The antebellum period was characterized by many changes in tariff rates. What best describes the effect of removing a tariff on foreign cotton textiles?
a. The total supply curve of textiles would shift back. b. The price of both foreign-made and domestic-made textiles would decrease. c. The price of foreign-made textiles would decrease and the price of domestic-made textiles would increase. d. The total (foreign and domestically produced. quantity of textiles purchased in the US would decrease. e. The real income of textile consumers would decrease.