A perfectly competitive firm maximizes profit when:

A perfectly competitive firm maximizes profit when:
 a. its marginal revenue is equal to its marginal cost.
  b. its marginal revenue is greater than its marginal cost.
  c. its marginal cost is negative.
  d. its marginal cost is greater than its marginal revenue.
  e. its marginal cost is minimum.

QUESTION 2

Many communities have granted monopoly rights to cable companies. This is an example of a monopoly created through:
 a. government licensing.
 b. ownership of the cable resources.
 c. patent protection.
 d. smart business practices by shrewd entrepreneurs.

QUESTION 3

It seems evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

_____ is the locus of the minimum points of various short-run average cost curves depicting different plant sizes.
 a. Long-run marginal cost
  b. Expansion path
  c. Long-run average cost
  d. Isocost

QUESTION 5

Quickie Inc, a perfectly competitive firm, currently maximizes profit by producing 400 units of output. If its marginal cost is equal to 25 and its average total cost is 20, then how much is it earning in economic profit?
 a. Economic profit is always equal to zero in perfect competition.
  b. 10,000
  c. 8,000
  d. 2,000
  e. 4,000

QUESTION 6

The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade. This market power was obtained through:
 a. illegal means.
 b. control of a scarce resource.
  c. patent protection.
 d. government licensing.

QUESTION 7

The cheapest way to produce a certain amount of output may vary between the short and long-run because:
 a. all inputs can be adjusted in the long run.
  b. all inputs can be adjusted in the short run.
  c. input prices are fixed in the short run.
  d. prices increase over the long-run.

QUESTION 8

The standard interpretation of the Ricardian model is that differences in factor endowments between countries account for differences in labor productivity.
 a. True
  b. False
  Indicate whether the statement is true or false