In a perfectly competitive market, if price is greater than average total cost at the level of output where marginal cost equals marginal revenue:
A. the firm must be in long-run equilibrium.
B. the firm is earning an economic profit greater than zero.
C. the firm is earning an economic profit less than zero.
D. We cannot determine whether the firm is earning positive or negative profits.
Answer: B
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If there is a collusive agreement in a duopoly to maximize profit, then the price will
A) equal the marginal cost of production. B) equal the average total cost of production. C) be the same as the price set by a monopoly. D) be the same as the price set by a competitive industry.
Typically, as an economy begins to emerge from a recessionary phase of the business cycle
A) investment begins to fall. B) inflation begins to fall. C) unemployment falls immediately. D) unemployment continues to rise.
Real wages of manufacturing workers
a. rose between 1860 and 1890, but then fell for much of the period until 1920. b. remained fairly stable until 1900, but then rose between 1900 and 1914. c. followed a general upward trend from 1860 through 1920. d. exhibited dramatic periods of rise and fall between 1860 and 1920.
Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:
A. elastic. B. inelastic. C. unitary elastic. D. infinitely elastic.