Refer to Figure 12-13. Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. If the firm represented in the diagram continues to stay in business, in the long-run equilibrium
A) it will expand its output to Q2 and face a price of P2.
B) it will expand its output to Q3 and face a price of P1.
C) it will continue to produce Q1 but faces the higher price of P2.
D) it will reduce its output to Q0 and face a price of P0.
A
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For a monopolistically competitive firm
A) price equals marginal revenue at all levels of output. B) price is less than marginal revenue at all levels of output. C) price is greater than marginal revenue at all levels of output except for the first unit. D) the demand curve is perfectly inelastic and marginal revenue is zero.
In the collective bargaining process
a. supply and demand analysis is used to determine the wage. b. the contract can legally cover only the wage or salary determined. c. there is often heated discussion with threats of strikes and counterthreats of lockout. d. the negotiation period is limited to thirty days.
The U.S. income tax
a. discourages saving. b. encourages saving. c. has no effect on saving. d. will reduce the administrative burden of taxation.
Answer the following questions true (T) or false (F)
1. If additional units of a good are produced at an increasing opportunity cost, the production possibilities frontier would be bowed outward (concave). 2. On a diagram of a production possibilities frontier, economic decline (negative growth) is represented by the production possibilities frontier shifting inward. 3. If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters.