Some resources are better suited to produce certain goods than other resources. This fact leads to
A. the law of increasing additional cost.
B. a linear production possibilities curve.
C. increases in technology.
D. inefficiency in the economy.
Answer: A
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The demand for a subway ride is probably ________ than is the demand for a car because ________.
A. less price elastic; people will take a longer time to adjust to the change in the price of a subway ride B. more price elastic; a subway ride requires a smaller portion of one's income C. more price elastic; people will take a longer time to adjust to the change in the price of a subway ride. D. less price elastic; a subway ride requires a smaller portion of one's income
For a perfectly competitive firm, the long-run supply curve is its long-run marginal cost curve.
Answer the following statement true (T) or false (F)
Which of the following statements best describes firms under monopolistic competition?
a. Profits will be positive in the long run. b. Price always equals average variable cost. c. In the long run, positive economic profit will be eliminated. d. Marginal revenue equals minimum average total cost in the short run.
If firms in a market have been prohibited from reaching the minimum efficient scale,
a. the market is probably perfectly competitive. b. the market is probably a monopoly. c. mergers will result if the restrictions are eliminated. d. the LRATC curve has been shifting upward. e. the LRATC curve has been shifting downward.