Suppose that a monopolistically competitive firm is currently producing at the point where marginal revenue equals marginal cost and is not covering the variable cost of producing the last unit. In this situation, economic theory would predict that the firm will:
a. raise prices in order to lessen the amount of the loss.
b. collude with other producers.
c. exit the industry.
d. be able to switch to a point of profitability by producing where price equals marginal cost.
Ans: c. exit the industry.
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If the demand for steak shifts to the left, a likely reason is that
A. the price of cattle feed has risen. B. the price of pork has fallen. C. the price of steak has fallen. D. cattle production has fallen.
People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called
A) unemployed workers. B) discouraged workers. C) unhappy workers. D) involuntarily unemployed. E) part-time lookers.
Which of the following statements is CORRECT?
A) The United States produces more goods than services. B) The United States produces more services than goods. C) The United States produces more agricultural goods than manufactured goods. D) The United States produces an equal amount of goods and services.
In the above figure, the monopsony wage rate is ________ and the quantity of labor is ________
A) $7.00; 150 hours B) $8.00; 200 hours C) $6.00; 100 hours D) $8.00; 100 hours