Assume the market for cage-free eggs is perfectly competitive. All else equal, as more farmers choose to produce and sell cage-free eggs, what is likely to happen to the equilibrium price of the eggs and profits of these farmers in the long run?
A) The equilibrium price is likely to remain unchanged and profits are likely to increase.
B) The equilibrium price is likely to decrease and profits are likely to decrease.
C) The equilibrium price is likely to increase and profits are likely to increase.
D) The equilibrium price is likely to increase and profits are likely to remain unchanged.
B
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Why does the aggregate demand (AD) curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?
Explain why monopolists do not achieve efficiency
A disadvantage of team production compared to contracting out is that
a. transaction costs are often higher with team production. b. the level of specialized knowledge required by team production is greater than with contracting out. c. the problem of shirking must be more carefully addressed with team production. d. team production increases the cost of production in most situations.
Government-operated firms with monopoly power
a. will necessarily meet the criteria of economic efficiency, as long as price equals average total cost. b. will always be more efficient than private firms because they do not have to make a profit. c. are likely to be inefficient since some of the monopoly power is likely to serve the interests of the governmental managers and employees. d. are highly responsive to changes in the preferences of individual consumers since consumers are also voters.