Which of the following is correct when the perfectly competitive firm is producing its long-run equilibrium output level?
a. MR equals MC.
b. AR equals ATC.
c. P equals MC.
d. All of these.
d. All of these.
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If the price of oil goes up by 50% and the quantity demanded goes down by 25%, the absolute value of the price elasticity of demand is
A) 0.25. B) 0.50. C) 0.75. D) 1.00.
Developing countries do:
A. compete with one another for foreign investment, and this competition reduces the benefits from foreign investment. B. not compete with one another for foreign investment, because they have sufficient domestic saving to finance their investment needs. C. not compete with one another for foreign investment, because they lack the infrastructure to attract it in the first place. D. compete with one another for foreign investment, but this competition is beneficial to developing countries because it insures a more efficient allocation of resources.
The supply curve slopes upward because producers' cost per unit eventually
A. decreases as more units are sold. B. will be subsidized by the government. C. remains unchanged as more units are sold. D. increases as more units are sold.
The ability to set a price greater than marginal cost guarantees an economic profit for the monopolistic competitor (assuming P > AC)
Indicate whether the statement is true or false