Answer the following statement(s) true (T) or false (F)
1. In the long run, all inputs to a firm’s business can be adjusted.
2. When a firm experiences diminishing marginal product, its total output declines.
3. Fixed costs do not have to be paid if no output is produced.
4. In the short run, a firm’s average fixed cost rises with output.
5. Marginal cost is the change in fixed cost associated with a change in output by one unit.
1. TRUE
2. FALSE
3. FALSE
4. FALSE
5. FALSE
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The existence of unemployment can be illustrated on a production possibilities curve by a(n)
A. point below or inside the surface of the curve. B. inward shift of the curve. C. movement along the curve. D. outward shift of the curve.
A competitive market is in long-run equilibrium. If demand decreases, we can be certain that price will
a. fall in the short run. All firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. b. fall in the short run. No firms will shut down, but some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. c. fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. d. not fall in the short run because firms will exit to maintain the price.
Under the perfectly competitive market structure, the demand curve of an individual firm is
A) perfectly inelastic. B) downward sloping. C) relatively inelastic. D) perfectly elastic.
Inflation is a rise in:
A. The general level of prices over time B. The standard of living over time C. Unemployment over time D. Real GDP over time