If a perfectly competitive firm raises its price,
a. the quantity demanded of its good falls because the firm faces a downward- sloping demand curve
b. the quantity demanded of its good falls to zero
c. new firms will enter, attracted by the higher price
d. it loses some of its market share
e. other firms in the industry must follow the leader
B
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In a free market there are virtually no restrictions, or at best few restrictions on how factors of production can be employed
Indicate whether the statement is true or false
When the domestic price of a good is below the world price, the imposition of a tariff on the import of the good _____
a. results in a loss in producer surplus b. results in a gain in producer surplus c. does not affect government revenue d. does not lead to a deadweight loss
When market conditions in a price-taker market are such that firms cannot cover their production costs,
a. the firms will suffer long-run economic losses. b. the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits. c. some firms will go out of business, causing prices to rise until the remaining firms can cover their production costs. d. all firms will go out of business, since consumers will not pay prices that enable firms to cover their production costs.
Suppose supply decreases and demand increases. What effect will this have on the quantity?
A. It will rise. B. It will remain the same. C. It may rise or fall. D. It will fall.