In the long run, diminishing returns would:
A. not exist because no input is held constant.
B. not exist because all inputs are held constant.
C. still exist at a lesser degree because inputs are allowed to vary.
D. exist at a greater degree, because all inputs are allowed to vary.
Answer: A
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What will be an ideal response?
Fresh Taste, Inc produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive
The figure above shows the demand curve that Fresh Taste faces (D), the company's marginal revenue curve (MR), its marginal cost curve (MC), and its average total cost curve (ATC). If Fresh Taste and other firms in the market are currently producing their profit maximizing quantities of cereals, then the market is A) in both short-run equilibrium and long-run equilibrium. B) in short-run equilibrium but not in long-run equilibrium. C) in long-run equilibrium but not in short-run equilibrium. D) neither in short-run equilibrium nor in long-run equilibrium.
What is an imperfectly competitive industry?
What will be an ideal response?
Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25 × PCTV + 0.0005 × M + 0.3 × PSTV, where QCTV is the quantity of cable TV demanded (thousands of households), PCTV is the price of cable TV, M is income and PSTV is the price of satellite TV service. We can see that:
A. cable TV service is an inferior good. B. cable TV service is a normal good. C. cable TV service and satellite TV service are complements. D. cable TV service and satellite TV service are unrelated to one another.