When oranges increase in price, the income effect
A) decreases the consumption of oranges only if oranges are a normal good.
B) decreases the consumption of oranges only if oranges are an inferior good.
C) always increases the consumption of oranges.
D) always decreases the consumption of oranges.
Ques. 2The LRAC curve
A) is the minimum points on all the short-run ATC curves.
B) shows the lowest possible marginal cost of producing the different levels of output.
C) shows the lowest attainable average total cost for all levels of output when all inputs can be varied.
D) generally lies above the short-run ATC curves.
Ques. 3In a regulated natural monopoly, a marginal cost pricing rule maximizes
A) total costs.
B) producer surplus.
C) economic profit.
D) total surplus.
Ques. 4In monopolistic competition, firms do not have to produce innovative products because they have downward-sloping demand curves.
Indicate whether the statement is true or false
Ques. 5If wages a firm pays it workers increase, then
A) the firm's long-run average cost curve shifts upward.
B) the firm moves rightward along its long-run average cost curve to where it has diseconomies of scale.
C) the firm's long-run average cost curve does not shift and there is no movement along the long-run average cost curve.
D) the firm moves rightward along its long-run average cost curve but not necessarily to where it has diseconomies of scale.
Ques. 6A consumer is in equilibrium when the consumption point is on
A) the budget line.
B) an indifference curve.
C) the highest indifference curve that just touches the budget line.
D) none of the above.
Ques. 7Under a marginal cost pricing rule, a regulated natural monopoly
A) makes a positive economic profit and there is a deadweight loss.
B) makes zero economic profit and there is no deadweight loss.
C) incurs an economic loss and there is a deadweight loss.
D) incurs an economic loss and there is no deadweight loss.
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