At outputs less than the minimum of average variable cost:
a. marginal cost is greater than average variable cost.
b. marginal cost is less than average variable cost.
c. marginal cost is equal to average variable cost.
d. marginal cost is parallel to average variable cost.
QUESTION 2At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts. No matter where one went, each vendor was selling these t-shirts for 15 a piece. Which market structure model would best characterize such a situation?
a. Perfect competition
b. Monopolistic competition
c. Monopoly
d. Oligopoly
e. Monopsony
QUESTION 3When a monopolist practices price discrimination, consumer surplus tends to increase.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4A country benefits from trade if it is able to obtain a good from a foreign country by giving up more of other goods than it would have to give up to obtain the good at home.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5Which of the following statements is true about the total product curve?
a. If input usage expands uniformly throughout the stages of production, then the slope of the total product curve is one.
b. The total product curve is inverted U-shaped.
c. As input usage gradually expands from low levels, total output begins to rise at an increasing pace.
d. If the use of inputs is too high at the initial stage of production, then the total prod-uct curve becomes horizontal.
QUESTION 6Which of the following statements characterizes perfect competition?
a. Producers enjoy complete freedom of entry and exit from the industry.
b. Producers sell differentiated products.
c. Producers are price makers.
d. Consumers are price makers.
e. The firm is not free to choose the quantity that it wishes to produce.
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