The supply curve of a price-taker firm in the short run is the:
a. firm's average variable cost curve.
b. portion of the firm's average total cost curve that lies above average variable cost curve.
c. portion of the firm's marginal cost curve that lies above average variable cost curve.
d. firm's marginal revenue curve.
QUESTION 2The price elasticity of demand measures consumer responsiveness to a price change.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3As market price increases in the short run, a profit-maximizing firm in a perfectly competitive market will expand output along its:
a. marginal cost curve.
b. average total cost curve.
c. average variable cost curve.
d. market demand curve.
QUESTION 4If an excise tax is placed on a product that has a perfectly inelastic demand, then:
a. the entire tax will be paid by the consumer.
b. the entire tax will be paid by the producer.
c. the consumer and producer will each pay a share of the tax.
d. the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
e. the tax is progressive.
QUESTION 5Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals 10 . Then what is market quantity supplied at a price of 10.
a. 100.
b. 1,000.
c. 10,000.
d. 18,000.
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