Firms can earn economic profits even in the long run if
a. they charge the highest price possible
b. there is a cost-reducing technological change
c. there are significant barriers to entry
d. marginal revenue equals marginal cost
e. price is less than average variable cost at all rates of output
QUESTION 2In the late nineteenth century, technological improvements and cheaper transportation in the United States led to
a. a decrease in minimum efficient scale in many industries
b. an increase in minimum efficient scale in many industries
c. an overall reduction in productive efficiency
d. a narrowing of markets
e. price increases in many industries
QUESTION 3The significance of the minimum point on the average variable cost curve is that
a. it is the profit-maximizing level
b. it is the selling price
c. it is the point of indifference between producing at a loss or shutting down
d. if the firm produces one more unit, its AVC will be less than MC
e. it shows the amount of total cost
QUESTION 4Unlike perfectly competitive firms, monopolists can
a. earn positive short-run economic profit even if price is less than average variable cost at all rates of output
b. sell any quantity of output at any price they choose
c. earn long-run economic profits
d. reduce the sales of other firms in the industry through advertising
e. face a perfectly elastic demand curve
QUESTION 5The first federal antitrust law enacted in the United States was:
a. The Clayton Act
b. Thr Sherman Antitrust Act
c. The Robinson Patman Act
d. The Federal Trade Commission Act
e. The Herfindahl-Hirschman Act
QUESTION 6Which of the following statements is true of a monopolist?
a. The firm charges the highest possible price.
b. The firm always earns a profit.
c. The firm might earn a profit in the long run.
d. The firm generates a larger consumer surplus than a perfectly competitive firm.
e. The firm is more production efficient than a perfectly competitive firm.
QUESTION 7Suppose that, in the short run, a perfectly competitive firm earns a normal profit. Which of the following is incorrect?
a. MR = price
b. MR = ATC
c. AR Q = TR
d. TR = TC
e. P = AVC
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