Demand and Cost Data for Sylvie's Shampoo CompanyTable 26.2A Monopolistically Competitive FirmPriceDemand Data QuantityCost Data OutputTotal Cost$2266$96$2077$104$1888$114$1699$126$141010$140Refer to Table 26.2. At the profit-maximizing output and price, Sylvie's Shampoo Company. will earn a ________ economic profit, and ________ the market will occur.
A. negative; exit from
B. positive; entry into
C. negative; entry into
D. positive; exit from
Answer: B
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When its marginal cost increases, a firm aiming at maximizing net revenue
A) can always raise its price, but only by the amount of the cost increase. B) can often raise its price by more than the cost increase. C) can raise its price, but always by less than the cost increase. D) may not be able to raise its price at all.
A good or service or a resource is nonexcludable if
A) it is possible to prevent someone from enjoying its benefits. B) it is not possible to prevent someone from benefiting from it. C) its use by one person decreases the quantity available for someone else. D) its use by one person does not decrease the quantity available for someone else.
Evaluate the following statement. "If marginal product is falling it will bring down the average product."
What will be an ideal response?
A constant-cost, perfectly competitive market is in long-run equilibrium. At present, there are 1,000 firms each producing 400 units of output. The price of the good is $60
Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $64. In the new long-run equilibrium, how will the average total cost of producing the good compare to what it was before the price of the good rose? A) The average total cost will be the same as it was before the price increase. B) The average total cost will be lower than it was before the price increase because of economies of scale. C) The average total cost will be higher than it was before the price increase because of diseconomies of scale arising from the increased demand. D) The average total cost will be higher than it was before the price increase since the increase in demand will drive up input prices.