The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is 8, in the short run the firm will
A) make zero economic profit.
B) make an economic profit.
C) incur an economic loss.
D) None of the above answers is correct because more information is needed to determine the firm's economic profit or loss.
Ques. 2Which of the following statements is TRUE about taxes?
A) Taxes always create more deadweight loss than do price ceilings and price floors.
B) Taxes decrease both consumer surplus and producer surplus while creating a deadweight loss.
C) Government revenue from a tax is always greater than the loss of producer surplus and consumer surplus.
D) Both answers A and C are correct.
Ques. 3Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding steers. The equilibrium price of beef will
A) fall.
B) perhaps rise, fall, or stay the same, but more information is needed to determine which it does.
C) stay the same.
D) rise.
Ques. 4Duke increased his spending on steak from 7 to 11 per week because of a 12 percent salary increase, so his
A) income elasticity of demand for steak is 1.37.
B) price elasticity of demand for steak is 1.37.
C) income elasticity of demand for steak is 3.7.
D) price elasticity of demand for steak is 3.7.
Ques. 5In the absence of property rights, factories will dump waste into a waterway up to the point where ________ equals ________.
A) marginal social cost; marginal social benefit
B) marginal social cost; marginal private cost
C) marginal private cost; marginal private benefit
D) marginal private cost; marginal social cost
Quick Reply
