The figure above shows the cost, marginal revenue, and demand curves of Golden Chow, a producer of dog food. The market for dog food is monopolistic competition. In the short run, Golden Chow sells 400 cans of dog food per day and makes ________.
Other firms have ________ incentive to enter the industry. A) an economic profit of 200 a day; an
B) an economic profit of 400 a day; an
C) a normal profit of 200 a day; no
D) an economic profit of 400 a day; no
Ques. 2Private information is a situation in which
A) two parties to an exchange have information that is available to outsiders if they ask.
B) one party to an exchange has information that is not available to the other.
C) the marginal cost of a person's obtaining additional information is zero.
D) the marginal cost of making information available to one more person is zero.
Ques. 3If Sean thinks that the choice between going to Olive Garden or Red Lobster is simply too confusing, a behavioral economist will explain that Sean is showing ________.
A) the endowment effect
B) bounded rationality
C) bounded self-interest
D) bounded will power
Ques. 4If people can benefit from a good even if they do not pay for it, the good is nonrival.
Indicate whether the statement is true or false
Ques. 5In the short run, perfectly competitive firms ________ but in the long run, perfectly competitive firms ________.
A) can incur an economic loss; incur an economic loss
B) can incur economic losses; make an economic profit
C) must make an economic profit; make an economic profit
D) can incur an economic loss; make zero economic profit
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