Assume a perfectly competitive firm is in long-run equilibrium and there is a decrease in market demand for the firm's output. Which of the following will occur?
A) Existing firms will maintain the original level of output, but they will shift their cost functions down in the short run.
B) Existing firms will raise price to cover the reduction in quantity demanded and maintain total revenue in the short run.
C) Existing firms will reduce output in the short run.
D) Market price will be above its original level.
C
You might also like to view...
Pollution problems generally represent
A) cases of good versus evil. B) cases of villain versus victim. C) morally neutral disagreements over competing uses of a scarce resource. D) Both a and b are correct.
At its present rate of output, 200 units, a perfectly competitive firm has variable costs of $10,000 and marginal cost of $50, and accepts the market price of $40 per unit. To improve its profit/loss situation, this firm should
a. increase output b. reduce output but not to zero c. maintain the present rate of output d. shut down e. raise the price
Due to resource scarcity,
a. some economic activities have an opportunity cost b. all economic activities have an opportunity cost c. no economic activities have an opportunity cost d. economic activities have opportunity costs equal to their market prices e. economic activities have opportunity costs generally lower than their market prices
Mr. Kohl made $44,000 in 2004, the base year. By 2010 he was earning $60,000. If the CPI had risen to 120 by 2010, how much were Mr. Kohl's real wages that year, and by what percentage had they changed?
What will be an ideal response?