In the above figure, if this firm produces output level Q2, it has average variable costs of
A. OD.
B. OF.
C. OC.
D. OE.
Answer: D
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If the market price of the product that employs labor in production increases:
a. the marginal product of labor increases. b. the demand curve for labor shifts to the left. c. the price of labor decreases. d. the marginal revenue product of labor increases. e. the supply curve of labor shifts to the left.
Suppose that the price elasticity of supply is 0.8 and the price increases by 10%. We would predict:
A. an 8% increase in quantity supplied. B. a 12.5% increase in quantity supplied. C. a 0.8% increase in quantity supplied. D. a 1.25% increase in quantity supplied.
A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________.
A. increase; increase B. increase; decrease C. decrease; decrease D. decrease; increase
Monopolistically competitive firms
A) have market power because they can set price above marginal cost. B) have no market power because they earn zero economic profit. C) have no market power because of free entry. D) have no market power because price equals marginal cost.