Suppose in the automobile industry with free entry and exit, the marginal cost is constant at $5,000, two identical manufacturers are currently producing 1,000 cars each and earning zero economic profit
If the equilibrium price is $20,000, then what is the fixed cost for each manufacturer? A) $20,000,000
B) $15,000,000
C) $5,000,000
D) $10,000,000
B
You might also like to view...
If a 10 percent cut in price causes a 15 percent increase in sales, then:
a. total revenue will decrease. b. demand is price inelastic in this range. c. demand is price elastic in this range. d. demand is unit elastic in this range. e. total revenue will remain the same.
Three basic decisions must be made by all economies. What are they?
a. How much will be produced, when it will be produced, and how much it will cost. b. What the price of each good will be, who will produce each good, and who will consume each good. c. What will be produced, how goods will be produced, and for whom goods will be produced. d. How the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply.
Perfect competition requires a non-standardized product.
Answer the following statement true (T) or false (F)
Some economists argue that the federal government should normally run a deficit at potential GDP, with the borrowed funds applied to
A) consumption goods. B) investment goods. C) social security benefits. D) health care costs.