Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.
What will be an ideal response?
Ques. 2A firm's long run cost is the cost of production when the firm
A) calculates its cost at least one year into the future.
B) adds together all of its short run costs.
C) uses the economically efficient quantities for its plant and its labor.
D) can vary the amount of output it produces.
Ques. 3The above figure shows the market for labor. The employer is a monopsony. The firm will maximize its profit by hiring 400 hours of labor because at that point
A) MCL > W.
B) VMP > W.
C) MCL > VMP.
D) MCL = VMP.
Ques. 4The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will ________. Some firms will ________ the industry, and the industry supply curve will shift ________.
A) make economic an profit; enter; rightward
B) make zero economic profit; exit; leftward
C) incur economic losses; exit; rightward
D) incur economic losses; exit; leftward
Ques. 5In the scenario above, as a result of increased advertising, Talbot's average total cost
A) falls by 20 per coat.
B) rises by 50 per coat.
C) rises by 30 per coat.
D) falls by 40 per coat.
Ques. 6If the demand for cigarettes decreases after the U.S. Surgeon General publicizes five new diseases associated with smoking, this is conclusive evidence that the demand for cigarettes is elastic.
Indicate whether the statement is true or false
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