Answer the following statement(s) true (T) or false (F)
1. A firm that has not shut down in the short run will not shut down in response to a decrease in the marginal costs.
2. For prices greater than the minimum value of average variable cost, the firm's short-run supply curve coincides with its short-run marginal cost curve.
3. Given two supply curves passing through the same point, the flatter one has the higher elasticity.
4. Industry's supply curves tend to be less elastic than the supply curves of individual firms.
5. The elasticity of supply is positive because prices and quantities are always positive.
1. True
2. True
3. True
4. False
5. False
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A price floor set above the equilibrium price leads to a(n) ________
A) excess demand for goods in the market B) excess supply of goods in the market C) increase in social well-being D) positive externality
Joe, a hair dresser, offers students a discount price on haircuts. This form of pricing is an example of
A) a marginal cost pricing rule. B) an average cost pricing rule. C) price discrimination. D) perfect price discrimination.
When there are economies of scope between two products which are separately produced by two firms, merging into a single firm can:
A. lead to a reduction in sales. B. accomplish a reduction in costs. C. lead to an increase in cost. D. accomplish an increase in sales.
If profits in a monopolistically competitive market are positive, we can conclude that:
A. price is equal to average cost. B. price is greater than average cost C. the market is in long-run equilibrium. D. price is less than average cost.