A profit maximizing perfectly competitive firm would never operate at an output level where
a. it would not cover all of its variable costs.
b. it was not earning a positive economic profit.
c. it was not earning a zero economic profit.
d. it was not earning an accounting profit.
QUESTION 2Economic stagnation and recession result in unemployment and poverty.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3An increase in the price of sodium carbonate, a chemical compound used in detergents, will:
a. increase the quantity of detergents demanded.
b. decrease the quantity of detergents demanded.
c. decrease the demand for detergents.
d. increase the demand for detergents.
QUESTION 4The ordering of market structures from most market power to least market power (where market power is the ability to set its own price) is:
a. monopoly, monopolistic competition, oligopoly, perfect competition.
b. perfect competition, monopolistic competition, oligopoly, monopoly.
c. oligopoly, monopoly, monopolistic competition, perfect competition.
d. monopoly, oligopoly, monopolistic competition, perfect competition.
e. monopoly, perfect competition, monopolistic competition, oligopoly.
QUESTION 5If a competitive firm is operating in short run equilibrium and then its fixed costs fall by 40 percent, it should:
a. use more labor and less capital in current production.
b. not change its output.
c. increase its output.
d. decrease its output.
QUESTION 6The poverty threshold is often determined in terms of the expenditure on meals that meet a predetermined nutritional standard.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7If cheese spreads and butter are substitutes, an increase in the price of butter will:
a. shift the demand curve for cheese spreads upward.
b. shift the demand curve for cheese spreads downward.
c. shift the demand curve for butter upwards.
d. shift the demand curve for butter downward.
QUESTION 8Under perfect competition, at the profit-maximizing level of output:
a. price is greater than marginal revenue.
b. price is equal to marginal revenue.
c. marginal revenue is equal to zero.
d. the marginal revenue curve is upward sloping.
e. the average revenue curve is upward sloping.
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