A positive statement i. makes a statement about how the world operates. ii. is a true statement. iii. can be tested against the facts

Monopolists engage in game theory pricing behavior

Indicate whether the statement is true or false

Answer the following statements true (T) or false (F)

1. If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firm will earn profits. Conversely, if the price that a firm charges is lower than its average cost of production, the firm will suffer losses. 2. When a firm earns losses because it does not make enough revenue to offset the increased variable costs plus fixed costs, it should remain open in the short run. 3. For a constant cost industry, whenever there is an increase in market demand and price, the supply curve shifts to the right with new firms’ entry and stops at the point where the new long-run equilibrium intersects at the same market price as before. 4. The fact that perfectly competitive markets are the most usual type of market supports the statement that, in the long run, markets will feature both productive and allocative efficiency. 5. A natural monopoly occurs when a company has control of a scarce physical resource.

In a monetary system, people will exchange a good for

a. another good. b. a service. c. money. d. gold or other precious metals.

The WTO functions as:

A. The enforcer of trade rules for the world. B. An international informant on terrorism. C. An international weapons inspector. D. The international authority on currency exchange.