When the world price of the traded good is lower than the domestic no-trade equilibrium price, free trade causes domestic production to fall and domestic consumption to rise
a. True
b. False
Indicate whether the statement is true or false
True
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Answer the following statement(s) true (T) or false (F)
1. A competitive firm will exit an industry in the long run if the market price falls below the firm's break-even price. 2. For a competitive firm with a downward sloping marginal cost curve, the supply curve and the marginal cost curve look exactly the same 3. There is no reason for a competitive firm to stay in business if it is making zero economic profit. 4. A decrease in firms’ variable costs will cause the output of the market to decrease. 5. A technological advance that reduces firms’ variable costs will lead to higher profits in the long run of a perfectly competitive industry.
Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs $2,000 and a unit of advertising on the radio costs $5,000. At their current advertising levels, the
marginal benefit of advertising in the flyer is $1,500 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true? A) To maximize profits, Franco's should increase the amount of advertising in flyers. B) To maximize profits, Franco's should decrease the amount of advertising in flyers. C) To maximize profits, Franco's should decrease the amount of radio advertising. D) Franco's is currently maximizing its profits from advertising.
One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population
a. True b. False Indicate whether the statement is true or false
Which of the following explains the shape of a total fixed cost curve?
a. It slopes downward because fixed costs decrease as output increases. b. It slopes upward because fixed costs increase as output rises. c. It is horizontal because fixed costs do not change with changes in output. d. It is U-shaped because fixed costs are high at very low and very high output levels.