In the long run, constant returns to scale necessarily occur when the firm increases its production and the firm's
A) total cost increases.
B) total cost does not change.
C) average total cost increases .
D) average total cost does not change.
E) production increases by more than does the firm's total cost.
D
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Consider a competitive constant-cost industry in which each firm's marginal and average costs are given by the formulas MC = 4q and AC = 2q + 50/q , where q represents the quantity supplied by the firm.
(i) Determine the quantity supplied by each firm in long-run equilibrium, and determine the firms' break-even price. (ii) Suppose the market demand for the good produced by this industry is given by the formula P = 320 - 2Q, where P is the market price and Q is the market quantity. If the industry is in a long-run competitive equilibrium, what will be the market price and quantity, and how many firms will be in the industry?
When a firm exits a monopolistically competitive market, the individual demand curves faced by all remaining firms in that market will
a. shift in a direction that is unpredictable without further information. b. shift to the right. c. shift to the left. d. remain unchanged. It is the supply curve that will shift.
Economists assume that tastes and preferences of individuals are:
a. constantly in flux. b. determined by product prices. c. unchanged during one's life. d. given and are relatively stable.
The free-rider problem arises because:
A. once provided, a public good is available to all regardless of whether they paid for it. B. poor people cannot afford to contribute to public goods. C. enforcement of tax laws is inadequate. D. people disagree with how the government spends its money.