If the market for maple syrup is perfectly competitive, then in the long-run equilibrium, firms are
A) entering the market.
B) exiting the market.
C) making zero economic profit.
D) temporarily shutting down.
Ques. 2The quantity theory of money asserts that an increase in the quantity of money leads to an equal percentage increase in the price level in the long run.
Indicate whether the statement is true or false
Ques. 3The entry of China and other developing countries into the global economy ________ the value of marginal product of factory workers in the United States and ________ their wage rate.
A) increases; lowers
B) decreases; raises
C) decreases; lowers
D) increases; raises
Ques. 4If a firm faces a labor supply curve that is positively sloped, then the marginal cost of labor curve
A) equals the wage rate.
B) equals the minimum wage.
C) lies above the value of marginal product curve.
D) lies above the labor supply curve.
Ques. 5In an indifference curve/budget line diagram, a consumer will select the combination of goods that is on the budget line and for which the
A) marginal rate of substitution between two goods is equal to the relative price of the two goods.
B) marginal rate of substitution between two goods is greater than the relative price of the two goods.
C) slope of the indifference curve is less than the relative price of the two goods.
D) slope of the indifference curve is greater than the relative price of the two goods.
Ques. 6If average variable cost is decreasing as output increases, then marginal cost is definitely
A) decreasing as output increases.
B) increasing as output increases.
C) less than average variable cost.
D) greater than average variable cost.
Ques. 7The above figure shows a monopolistically competitive firm. The figure
A) is only a short-run illustration because the firm is making an economic profit.
B) could be either a short-run or long-run illustration because monopolistically competitive firms can make an economic profit in the long-run.
C) is only a long-run illustration because the firm is making zero economic profit.
D) is neither a short- nor a long-run illustration.
Ques. 8The figure above shows the market supply and market demand for pizza.
a) What is the efficient quantity of pizzas?
b) If 70,000 pizzas are produced, what area represents the deadweight loss?
c) Why does the deadweight loss in part (b) occur?
d) If 20,000 pizzas are produced, what area represents the deadweight loss?
e) Why does the deadweight loss in part (d) occur?
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