Answer the following statements true (T) or false (F)
1. The short-run supply curve of a purely competitive industry tends to be steeper than the long-run supply curve.
2. The long-run supply curve for a competitive, decreasing-cost industry is downward-sloping.
3. The reason why the long-run supply curve for a purely competitive industry may be upward-sloping is because of diminishing marginal returns.
4. An upward-sloping long-run supply curve indicates a constant-cost industry.
5. Productive efficiency refers to a condition where marginal cost is equal to marginal revenue in the long run.
1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. FALSE
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Movement along the aggregate supply curve is referred to as a change in aggregate quantity supplied
a. True b. False Indicate whether the statement is true or false
Once a book has been written, would an author facing an inelastic demand curve for the book prefer to raise or lower the book's price? Why?
A. The author would raise or lower the price. Because the author's cost is a sunk cost, any increase or decrease in price will increase revenue and profit. B. The author would prefer to raise the book's price. Raising prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises. C. The author would prefer to lower the book's price. Lowering prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises. D. The author would not change the price. Because the author's cost is a sunk cost, any change in price will decrease revenue and profit. References
Suppose Cournot duopolist firms operate with each having a cost of 30qi (i = 1,2 ) so that each firm's marginal cost is 30. The inverse market demand curve is P = 120 - Q where Q = q1 + q2. Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits. At the Nash-Cournot equilibrium, the total output, Q, is
A) 30. B) 45. C) 60. D) 90.
Which statement is true?
A. Collusion is most likely in industries with high concentration ratios. B. Collusion is most likely in industries with low concentration ratios. C. There is no relationship between the likelihood of collusion and the size of the concentration ratio.