As exit from a perfectly competitive industry that is currently unprofitable pushes up the market ...

As exit from a perfectly competitive industry that is currently unprofitable pushes up the market price, producers will move from a situation where price ____ average total cost to one where price ____ average total cost.
 a. exceeds; equals.
 b. is less than; equals.
  c. equals; is less than.
  d. equals; exceeds.

QUESTION 2

When the demand curve is vertical and the supply curve is upward sloping,:
 a. a rise in the input price that increases marginal cost by 1, decreases the firm's profit by 1.
  b. a drop in the input price that lowers the marginal cost by 1, doubles the firm's profit.
  c. a drop in the input price that lowers the marginal cost by 1, decreases the output price by 1.
  d. a rise in the input price that increases the marginal cost by 1, doubles the output price.

QUESTION 3

Nations trade what they produce in excess of their own consumption to:
 a. generate jobs for the domestic economy.
  b. earn good will from the World Bank.
  c. prevent chronic surpluses from driving down domestic prices.
  d. acquire other things that they want to consume.
  e. reduce the size of their foreign trade deficit.

QUESTION 4

Steve is about to start up a business in a monopolistically competitive market. Which of the following can he expect?
 a. He can expect market entry to be difficult as there exist entry barriers.
  b. He can expect to enjoy a huge amount of market power.
  c. He can expect to face a highly inelastic demand curve.
  d. He can expect to find close substitutes of the product he is planning to produce.
  e. He can expect to face an infinitely elastic demand curve.

QUESTION 5

Say that Japanese firms commit to avoid laying off their employees when demand for their products is low, but American firms often lay off workers when demand is low. As a result, ceteris paribus, we would expect Japanese firms to:
 a. face more elastic demand curves than American firms.
 b. have relatively greater variable costs than American firms.
 c. continue to produce at some prices at which American firms would shut down.
  d. shut down at prices at which American firms would continue to operate.

QUESTION 6

Suppose a commodity market is initially in equilibrium. An increase in the nation's skilled labor force then lowers the marginal cost of producing each unit of output. Which of the following changes will be observed?
 a. The demand curve will shift upward
  b. The supply curve will shift downward
  c. The demand curve will shift downward
  d. The supply curve will shift upward

QUESTION 7

Income inequality has risen in recent years due to a rise in labor's share of national income as a result of globalization.
 a. True
  b. False
  Indicate whether the statement is true or false