What must be the case if a perfectly competitive firm's economic loss is less by shutting down rather than by producing and selling some output?
What will be an ideal response?
If a firm's economic loss is greater when it produces and sells some output than when it shuts down, it is the case that the price of the product is less than the average variable cost. When the price is less than the average variable cost, the firm's economic loss is less if it shuts down than if it produces and sells output.
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The kinked demand curve model is based on the assumption that each firm
A) considers its rival's output to be fixed. B) considers its rival's price to be fixed. C) believes rivals will match all price changes. D) believes rivals will never match price changes. E) none of the above
Discuss how a market reaches equilibrium. How is it expressed graphically?
What will be an ideal response?
A market in which a price-controlled good is sold at an illegally high price is known as
A) a flooring market. B) a ceiling market. C) a black market. D) a supermarket.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases. B. initially increases, then decreases. C. decreases. D. remains constant.