A firm encountering economies of scale over some range of output will have a
A. constant long-run average cost curve.
B. falling long-run average total cost curve.
C. rising, then falling, then rising long-run average total cost curve.
D. rising long-run average total cost curve.
Answer: B
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If the market price of the product that employs labor in production increases:
a. the marginal product of labor increases. b. the demand curve for labor shifts to the left. c. the price of labor decreases. d. the marginal revenue product of labor increases. e. the supply curve of labor shifts to the left.
In a market economy, what encourages firms to develop new products and production processes?
A. contracts B. insurance C. patents D. accounting rules
The social cost attached to monopolies is reflected by the fact that
A. consumers pay prices that exceed the marginal cost of production. B. consumers are always willing to pay lower prices for a monopolist's product than for the products of perfectly competitive firms. C. the demand for a monopolist's product is always lower than the demand for the products of perfectly competitive firms. D. monopolies produce more output than consumers desire to buy.
Which of the following is not true with regard to economic profit?
a. economic profit equals total revenue minus total cost b. economic profit excludes implicit cost c. economic profit is any profit greater than a normal profit d. firms attempt to maximize economic profit e. long-run economic profit is always zero in perfect competition