In long-run equilibrium, a perfectly competitive firm produces the output level that minimizes ...

In long-run equilibrium, a perfectly competitive firm produces the output level that minimizes average total cost.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

The market's role is to ensure that nonrenewable resources are allocated across time to where they are most highly valued. This implies, if more is used today then:
 a. the future supply curve shifts downward.
  b. financial investments offer a lower rate of return.
  c. the return on saving the resource for future use rises.
  d. the expected demand for the resource in the future is low.
  e. technological advancement will guarantee a steady future supply.

QUESTION 3

If a country has absolute advantage in the production of all goods, then it will have no incentive to trade.
  Indicate whether the statement is true or false

QUESTION 4

Which of the following reflects the correct relationship between average total cost (ATC) and marginal cost (MC)?
 a. When MC > ATC; ATC is falling.
  b. When ATC is minimum; ATC < MC.
  c. When MC < ATC; ATC is falling.
  d. When MC < ATC; ATC is constant.
  e. When ATC < MC; MC is falling.

QUESTION 5

Firms should shut down in the short run whenever price is less than the average total cost.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

On account of a massive construction boom in a country, the demand for iron ore increases substantially. This causes iron ore prices to escalate. Producers increase iron ore mining considerably in the short run, in spite of knowing that this will adversely affect future availability of ore. Which of the following is most similar to the scenario described above?
 a. Corn producers hoard their supplies in order to induce a price hike.
  b. Petroleum manufacturers increase extraction in response to sky-rocketing fuel prices.
  c. The government of a country makes aforestation mandatory for lumber firms.
  d. Impressive revenue generation induces the government of a country to impose additional fuel surcharge.
  e. To discourage smoking, the government of a country increases sales tax on cigarettes.