In the long run, a perfectly competitive market will
A) produce only the quantity of output that yields a long-run profit for the typical firm.
B) supply whatever amount consumers will buy at a price which earns the market an economic profit.
C) supply whatever amount consumers demand at a price determined by the minimum point on the typical firm's average total cost curve.
D) generate a long-run equilibrium where the typical firm operates at a loss.
Answer: C
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The fact the consumers substitute one good for another when prices change is
A) taken into account by the fixed market basket used in calculating the CPI. B) not taken into account by the fixed market basket used in calculating the CPI. C) not important to economists. D) a reason why the CPI is used to calculate inflation rates. E) a reason why the CPI understates the actual change in the cost of living.
Horizontal merger occurs when
A. two firms merge where each is about the same size. B. two firms merge where one had sold its output to the other as an input. C. the merger moves the combined firm onto the horizontal portion of its long-run average cost curve. D. two firms producing a similar product merge.
Price gouging
a. Outlaw trade at prices above a certain price level b. Outlaw trade at prices below a certain price level c. Is an act of charging a high price to take advantage of shortages created by natural disasters d. None of the above
Older Americans living on a pension and therefore on a fixed income, tend to be made
a. better off when prices rise. b. better off when inflation rates rise. c. worse off when prices rise. d. worse off when prices fall.