A perfectly competitive firm will shut down if the price falls below its average total cost. Do you agree? Explain.
What will be an ideal response?
Ques. 2Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.
What will be an ideal response?
Ques. 3All of the following are programs that redistribute income by making direct payments to people in the lower part of the income distribution EXCEPT
A) social security programs.
B) welfare programs.
C) Individual Retirement Accounts.
D) unemployment compensation.
Ques. 4Explain the concept of adverse selection. Give an example.
What will be an ideal response?
Ques. 5Why are selling costs high in monopolistic competition?
What will be an ideal response?
Ques. 6Which of the following is a nonrenewable resource?
A) residential land
B) sunshine
C) a machine tool
D) oil
Ques. 7Economies of scale
A) lead to rising long-run average costs as output increases.
B) occur if output more than doubles when all inputs are doubled.
C) occur if output less than doubles when all inputs are doubled.
D) occur when management complexity brings rising average cost.
Ques. 8If a local fishing club spends time each year cleaning up local streams by removing trash thrown by motorists, efficiency would be improved if
A) motorists were fined and fishing club activities were taxed.
B) the fishing club's activities were subsidized.
C) the fishing club was taxed.
D) motorists were subsidized.