Which of the following is not a factor that automatically pushes firms in pure competition to earn only normal profits in the long run?
A. Entry of new firms
B. Exit of some firms
C. Changes in the firms' plant size
D. Changes in the market demand
D. Changes in the market demand
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The demand for Godiva mint chocolates is likely quite elastic because
a. there are many close substitutes. b. this particular type of chocolate is viewed as a luxury by many chocolate lovers. c. the market is narrowly defined. d. All of the above are correct.
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500. Which of the following is true?
A. Marginal cost is increasing. B. Average variable cost is increasing. C. Average variable cost is decreasing. D. Cannot determine without more information.
The optimal combination of pizza and Coke is the one
a. where marginal utility of pizza equals marginal utility of Coke. b. where total utility of pizza equals total utility of Coke. c. where marginal utility per dollar spent on pizza equals marginal utility per dollar spent on Coke. d. none of the above
The data suggest that in the European Union countries, the natural rate of unemployment
A) is now higher than in the U.S. B) is no longer a relevant concept. C) has steadily declined over the past two decades. D) will soon exceed the percentage of the labor force that is working. E) has become less "natural," since it is now almost entirely determined by the policies of a few large corporations.