Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. If the long-run supply curve is horizontal, then
A) some firms will enjoy long-run profits because they operate at minimum average cost.
B) the long-run price will be $0.20 per pound.
C) each consumer will purchase $100 worth of potatoes.
D) the long-run price will be set just above $0.20 per pound.
B
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For a monopolist, the marginal revenue gained when one more unit of output is sold is
A) the price at which the extra unit is sold minus the loss in revenue that results from cutting the price on units sold previously. B) equal to the price of the product. C) negative if price is above the midpoint of the demand curve. D) the average revenue created by the increased sales.
The cross-price elasticity of demand of products "M" and "N" is zero. This implies that "M" and "N" are
A) substitute products. B) complementary products. C) independent products. D) unique goods, as the price elasticity of demand for one of them is zero.
What would the B's best response be if player A does not stop?
a. Player A stops, Player B does not b. Player B stops, Player A does not c. Both players stop d. Neither players stop
If consuming more of a good doesn't affect a consumer's well-being, then:
A. the marginal utility of the good is positive. B. the marginal utility the good is negative. C. the marginal utility the good is constant. D. the marginal utility the good is zero.