In a perfectly competitive industry, assume the short-run average total cost increases as the output of the industry expands. In the long run, the industry supply curve will:
A. have a positive slope.
B. have a negative slope.
C. be perfectly horizontal.
D. be perfectly vertical.
Answer: A
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Which of the following will increase the supply of a product?
A) an increase in the price of the product B) an increase in the demand for the product C) an increase in the number of sellers D) a decrease in the demand for the product E) an increase in the price of inputs
The demand curve for the product of a monopolist is
a. a straight horizontal line. b. identical to the market demand curve. c. identical to its MR curve. d. below its MR curve.
When an economy's actual output is greater than its potential at some point in time, we say that it is experiencing:
A. a positive output gap. B. a negative output gap. C. inflation. D. deflation.
What are the assumptions of the model of perfect competition? Explain why each is important for short-run and long-run equilibrium