Perfectly competitive firms are earning economic profits at a market price of $6 and an average total cost of $5. If new firms enter and increase the average total cost for all firms, the market price will ________ until ________.
A) increase; it reaches the new higher average total cost
B) fall; it reaches the new higher average total cost
C) fall; it reaches the new lower average total cost
D) increase; economic profits are equal to zero
B) fall; it reaches the new higher average total cost
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If an economic change lowers the production cost of a commodity but does not reduce its market price, economic value will be created
Indicate whether the statement is true or false
Assuming MPC = 0.5, a $2,000 decrease in intended investment will shift the aggregate expenditure curve down by
a. $2,000 and will decrease the equilibrium level of national income by $2,000 b. $2,000 and will decrease the equilibrium level of national income by less than $2,000 c. $2,000 and will decrease the equilibrium level of national income by more than $2,000 d. more than $2,000 and will decrease the equilibrium level of national income by more than $2,000 e. less than $2,000 and will decrease the equilibrium level of national income by less than $2,000
The median voter theorem states that majority-rule political systems will produce policies that are most preferable for the median voter
a. True b. False Indicate whether the statement is true or false
Which of the following is an example of explicit costs of production on a dairy farm?
a. payments made for cattle feed and veterinary services b. payments received from customers for milk and cheese c. amounts lost by not leasing out the farm’s grazing fields d. the salary the farmer could have earned working in town instead