Consider a price searcher industry with high barriers to entry. In the short run, total revenues of the monopoly exceeds total costs. What will happen in the long run?
A. Nothing, because would-be rival firms are prohibited from entering the industry or find the start-up costs too costly to warrant the entrepreneurial risk to enter the industry.
B. Many firms will enter the market and each firm will eventually operate at a loss.
C. firm will be making just enough to cover per unit costs.
D. Additional firms will enter the market, but the price will remain the same because the existing firms will not allow price to decrease.
Ans: A. Nothing, because would-be rival firms are prohibited from entering the industry or find the start-up costs too costly to warrant the entrepreneurial risk to enter the industry.
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To maximize its profit, the firm in the figure above will produce ________ jeans and set a price ________ per pair of jeans
A) 150; between $50 and $25 B) 125; $25 C) 125; $50 D) 125; $75 E) None of the above answers are correct.
Between 2000 and 2015, the price of a PC fell and the quantity of PCs sold increased. Which of the explanations below is consistent with these facts?
A) The demand for PCs increased by more then the supply of PCs increased. B) The supply of PCs increased by more than the demand for PCs increased. C) The demand for PCs decreased by more than the supply of PCs increased. D) Both the supply of PCs and the demand for PCs decreased.
For a perfectly competitive firm, which of the following is not true at profit maximization?
A) Marginal revenue equals marginal cost. B) Price equals marginal cost. C) Market price is greater than marginal cost. D) Total revenue minus total cost is maximized.
Davy's Doggie Daycare rents a warehouse and field for $2,000 a month to house its boarding pooches. Farmer Fred owns the property, he used to use it for farming and made $3,000 a month, but has since retired. What is the cost of the warehouse and field to Davy?
A. It is an explicit cost of $2,000. B. It is an implicit cost of $3,000. C. It is an implicit cost of $0. D. There is both an explicit and implicit cost totaling $5,000.