A horizontal demand curve indicates:
A. a perfectly inelastic demand.
B. quantity demanded will drop to zero if the price increases by any amount.
C. price elasticity is 1.
D. price is not important in this market.
B. quantity demanded will drop to zero if the price increases by any amount.
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When a perfectly competitive industry is in long-run equilibrium, firms maximize profits, and entry forces the price down
a. until all loss making firms leave the industry. b. until each firm can earn acceptable level of economic profit. c. until price becomes tangent to the long run average cost curve. d. until the long average cost curve rises above the demand curve.
Use the following general linear demand relation:Qd = 100 - 5P + 0.004M - 5PRwhere P is the price of good X, M is income, and PR is the price of a related good, R.From the demand function it is apparent that related good R is
A. normal. B. inferior. C. a substitute for good X . D. a complement for good X.
"Because of unseasonable cold weather, much of the peach crop has been destroyed." This statement indicates that the:
A. price of peaches will fall. B. quantity of peaches that will be available at any given price has decreased. C. demand for peaches will shift to the left. D. quantity of peaches that will be available at any given price have increased.
Given the information that follows, how much are (a) accounting profits and (b) economic profits? Sales, $750,000; explicit costs, $450,000; return you could have earned by investing your money elsewhere, $50,000; wages that you and your family members could have earned doing the same work for another firm, $70,000.
What will be an ideal response?