Sam's surf shop has total costs of $2,000 when it is not producing any surfboards. This means that
A. Variable costs are $2000.
B. The shop is very inefficient in its production.
C. Fixed costs are zero.
D. Fixed costs are $2,000.
Answer: D
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Because perfectly competitive firms are price takers, each firm faces a demand that is
A) perfectly inelastic. B) perfectly elastic. C) highly inelastic but never is it perfectly inelastic. D) unit elastic. E) highly elastic but never is it perfectly elastic.
If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded, the incumbent will
A) produce the Cournot duopolist level of output. B) produce the Stackelberg leader level of output. C) set price equal to marginal cost. D) produce a level of output that is greater than the Stackelberg leader level of output.
Which of the following is not necessary in order for a firm to engage in price discrimination?
a. The producer must face an inelastic demand curve. b. The producer must face a downward-sloping demand curve. c. There must be at least two identifiable classes of consumers with different price elasticities of demand. d. The producer must be able, at little cost, to distinguish between the different classes of buyers. e. It must be impossible for one buyer to resell to another.
A carbon tax placed on coal:
A. would decrease the price of coal. B. would cause some producers of goods and services, like cars, to switch to other forms of energy. C. is unlikely to affect the demand for alternative forms of energy. D. would increase the quantity of coal demanded at every price.