The accompanying graph shows the cost curves for a competitive firm. What is the lowest price at which the firm will start producing output in the short run?
A. $1.25
B. $1.05
C. $0.90
D. $0.60
Ans: D. $0.60
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The domestic demand curve, domestic supply curve, and world supply curves for a good are given in the above figure. All the curves are linear. Initially, the country allows imports. Then imports are banned
Calculate how consumer and producer surplus change because of the ban. Is the country better off with the ban on imports? Why?
In a market system, how are the price signals established?
A. Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines. B. Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers. C. The forces underlying supply and demand interact to determine a market clearing price. D. Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items.
Inferior goods have an income elasticity of demand that is:
a. positive. b. negative. c. 0. d. greater than 1 in absolute value. e. equal to 1 in absolute value.
Monopoly is a word derived from Greek origins that means, roughly, single seller. Why is the definition of monopoly as single seller inadequate in economic terms?