In the above figure, which of the following statements is FALSE if the firm is operating at output level Q2?
A. Average costs would be lowered by expanding output.
B. Economic profits are positive.
C. The price is lower than at an equivalent firm forced by regulators to charge ATC pricing.
D. The output is equivalent to an unregulated monopolist.
Answer: C
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If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should
A) reduce its output. B) increase its output. C) lower the price. D) keep output constant and enjoy the above normal profit.
When the economy moves from point A to B in the above table, the opportunity cost of a computer in terms of televisions is
A) 10. B) 2.5. C) 2. D) 0.5.
A sudden fall in the market demand in a competitive industry leads to
a. A short run market equilibrium price higher than the original equilibrium b. A market equilibrium price lower than the short run price c. Some firms exiting the market d. All of the above
A move from I to J best represents a
A. change in quantity demanded.
B. change in demand.
C. increase in demand.
D. decrease in demand.