Economic profits in a perfectly competitive industry will encourage entry of new firms, which will shift the market supply curve to the right
a. True
b. False
Indicate whether the statement is true or false
True
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Refer to Figure 5-1. Marginal private benefit is represented by which curve?
A) D2 B) D1 C) Supply D) All of the above represent marginal private benefit.
A decrease in the economy’s capacity utilization rate
a. tends to decrease the unemployment rate. b. tends to increase the unemployment rate. c. has no impact on the unemployment rate. d. tends to have an unpredictable effect on the unemployment rate.
When the marginal product of an input is ______ than the average product, the marginal units of the input _____ the average product.
A. larger; lower B. smaller; raise C. smaller; do not affect D. larger; raise
Market failures are less likely to occur whenever
A) private returns are greater than social returns. B) social returns are greater than private returns. C) the free market produces less than what is socially optimal. D) new firms can easily attract start-up capital.