In Problem 14, do firms enter or exit the market in the long run? What is the market price and the equilibrium quantity in the long run?
What will be an ideal response?
The firms are incurring economic losses, so some firms exit the market. As firms exit the market, the market supply decreases so that in the long run the price rises to equal the minimum average total cost, $4.25 per smoothie. When the price is $4.25 for a smoothie, the equilibrium quantity is 550 smoothies per hour.
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In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods
Indicate whether the statement is true or false
If a multi-plant firm has three plants and uses each of the plants to produce its product, the marginal cost to produce the firm's product is equal to ________.
A) the sum of the marginal costs from each of the three plants B) the plant with the highest marginal cost C) the plant with the lowest marginal cost D) the sum of the average fixed costs from each of the three plants
If the average price level falls, the real value of wealth also falls
a. True b. False Indicate whether the statement is true or false
Economics is an empirical science, which means that economists
A) must use laboratory experiments to test their theories. B) evaluate a model or theory by whether its assumptions are consistent with the real world. C) try to prove their models are true by referring to logic. D) look for evidence to determine whether the model is useful or not.