Which of the following is true?
a. The objective of the firm is to maximize profits, by producing the amount that equates total revenue and total cost.
b. The objective of the firm is to maximize profits, by producing the amount that equates average revenue and average total cost.
c. The objective of the firm is to maximize profits, by producing the amount that equates average revenue and average variable cost.
d. The objective of the firm is to maximize profits, by producing the amount that equates marginal revenue and marginal cost.
QUESTION 2The longer the time period considered, the greater the mobility within an income distribution.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3An increase in the supply of oranges in a town drives down its price by 5 percent. Which of the following changes will be observed in the market?
a. The demand for oranges will decrease.
b. The demand for oranges will increase.
c. The quantity of oranges demanded will increase.
d. The quantity of oranges demanded will decrease.
QUESTION 4If barriers to entry exist in the market for a product, then:
a. the costs of entry and exit are relatively low.
b. there will be few close substitutes of the product in the market.
c. firms will be incurring losses in both the short run and the long run.
d. firms will tend to have relatively less monopoly power.
e. the existing firms will quit the market in the long run due to mounting losses.
QUESTION 5Which of the following is true?
a. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its total revenues and total cost.
b. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its average revenue and average total cost.
c. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its average revenue and average variable cost.
d. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its marginal revenue and marginal cost.
QUESTION 6Suppose a consumer is willing to pay a maximum of 45 for a brand of perfume whose price increases from 37 to 41 . What will be the impact of this price rise on the consumer surplus?
a. Consumer surplus will increase by 8.
b. Consumer surplus will decline by 8.
c. Consumer surplus will increase by 4.
d. Consumer surplus will decline by 4.
QUESTION 7It is often found that there is a sufficient mobility within the income distribution such that a person in the lowest quintile of income can move to the higher ones and vice versa.
a. True
b. False
Indicate whether the statement is true or false
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