The above figure shows three possible average total cost curves
If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC1, each produce 30 units, and the market price of the good is $16 per unit, then the firms A) make zero economic profit and new firms enter the market.
B) make zero economic profit and no firms enter or exit the market.
C) make zero economic profit and some firms exit the market.
D) incur an economic loss and some firms exit the market.
E) make an economic profit and new firms enter the market.
B
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In the absence of natural monopoly conditions, firms in a contestable market will
a. choose their price and output competitively. b. be able to successfully form a cartel and share monopoly profit. c. will not produce their output at the lowest possible cost. d. produce more than a monopoly but less than a competitive industry.
Symmetry of net substitution effects is one of the principal conclusions of the theory of utility maximization. Which two mathematical theorems are used to prove this symmetry?
a. Taylor's Theorem and Fundamental Theorem of Calculus b. Cauchy's Theorem and DeMoivre's Theorem c. Lagrangian Theorem and Fundamental Theorem of Calculus d. Envelope Theorem and Young's Theorem
When a perfectly competitive firm increases output, total revenue:
A. increases, because there is no price effect. B. decreases, because there is no price effect. C. increases, because there is no quantity effect. D. decreases, because there is no quantity effect.
Personal consumption expenditures is the smallest component of total spending
a. True b. False Indicate whether the statement is true or false