A firm will only earn normal profit in the long run
a. if firms can freely enter or leave the market
b. if firms do not try to maximize profit
c. only if the industry is perfectly competitive
d. whenever products are not differentiated
e. if barriers to entry exist
QUESTION 2Why might two presidential candidates appear to have very similar opinions during an election year even if they come from different parties?
a. They aim to please special-interest groups.
b. They are logrolling.
c. They try to appeal to the median voter.
d. Republicans and Democrats usually agree on most issues.
e. They don't wish to appear rationally ignorant.
QUESTION 3Because of easy entry, monopolistically competitive firms will
a. produce at the lowest average total cost
b. charge a price equal to marginal cost
c. earn no economic profit in the long run
d. take advantage of all economies of scale
e. earn no economic profit in the short run
QUESTION 4Direct majority-rule voting is a form of coercion in the sense that
a. all citizens must vote
b. all registered voters must vote
c. the median voter's preferences determine the outcome for everyone
d. the majority gets exactly what they want, but the minority does not.
e. individuals with higher incomes get more votes
QUESTION 5Suppose that a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25 . Average cost is minimized at Q = 35, where average cost is 50 . Which of the following is true?
a. This firm charges 50 for the good.
b. This firm charges more than 50 for the good.
c. This firm charges less than 50 for the good.
d. The firm has excess capacity at all output levels greater than 35 units.
e. Average cost is 50 at the profit-maximizing output level.
QUESTION 6Sally, Kelly, and Debbie are roommates deciding on how many cats they want in the apartment. Sally prefers three cats to two cats to one cat, Kelly prefers two to one to three, and Debbie prefers one to two to three. If they decide by majority vote (one versus two, two versus three, and so on), how many cats will they get?
a. none
b. one
c. two
d. three
e. the answer cannot be determined from the information given
QUESTION 7Suppose that a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25 . Average cost is minimized at Q = 35, where average cost is 50 . Which of the following is true?
a. This firm maximizes profit at an output level of 25 units.
b. This firm maximizes profit at an output level of 35 units.
c. This firm maximizes profit at an output level less than 25 units.
d. This firm maximizes profit at an output level greater than 35 units.
e. There is not enough information to find the firm's profit-maximizing level of output.
QUESTION 8Public choice theory suggests that political candidates try to get elected by
a. appealing to conservatives
b. appealing to liberals
c. appealing to senior citizens
d. appealing to the median voter
e. raising taxes
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