A firm's long-run average cost curve is increasing as output increases over all levels of output. As a result
A. small firms would have higher average costs of production than large firms.
B. there should be more than one firm in the industry.
C. there should be only one firm in the industry.
D. small firms and large firms will have identical average costs.
Answer: B
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Why is it possible that the economy will not self-correct out of a recessionary gap?
Which is a reason why there is no advertising by individual firms under pure competition?
A. Firms produce a homogeneous product. B. Firms do not make long-run profits. C. The quantity of the product demanded is very large. D. The market demand curve cannot be increased.
If a tax is placed on perfectly competitive firms that impose external costs on society, the firm's marginal cost curve will shift ________ and the industry supply curve will shift to the ________.
A. up; left B. down; right C. down; left D. up; right
If policymakers accommodate an adverse supply shock, then in the short run the unemployment rate
a. and the inflation rate rise. b. and the inflation rate fall. c. rises and the inflation rate falls. d. falls and the inflation rate rises.