Comment on the following statement: "In the short run, a firm's total costs will be zero if the firm chooses to produce nothing."
What will be an ideal response?
The statement is likely to be false. If a firm has any fixed costs at all, the firm's total costs will not be equal to zero even if it produces zero output.
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Which of the following is the correct way to describe equilibrium in a market? a. At equilibrium, demand equals supply
b. At equilibrium, quantity demanded equals quantity supplied. c. At equilibrium, market forces no longer apply. d. At equilibrium, the "fairest" price for output is achieved.
If a monopolistically competitive firm is earning profits in the short run:
A. it is acting like a perfectly competitive firm. B. other firms have an incentive to enter the market. C. barriers to entry will allow the firm to enjoy them in the long run as well. D. it should leave the industry before it gets competed away.
Answer the following statement true (T) or false (F)
1) Logrolling can either increase or diminish economic efficiency. 2) Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient. 3) The paradox of voting is that under majority voting rules the median voter decides the election outcome. 4) Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.
Identify the three major factors that can cause a shift in aggregate supply.
What will be an ideal response?