A sudden increase in the market demand in a competitive industry leads to
a. A market equilibrium profits higher than the original equilibrium in the short-run
b. A market equilibrium profits equal to the original equilibrium in the long-run
c. Both a and b
d. None of the above
QUESTION 2Economists love auctions because
a. They maximize consumer surplus
b. They create efficiency by allotting the item to the highest-value bidder
c. They create efficiency by allotting the item to the lowest value bidder
d. All of the above
QUESTION 3If a firm in a perfectly competitive industry is experiencing higher than normal returns, in the long-run
a. Some firms will leave the industry and price will rise
b. Some firms will enter the industry and price will rise
c. Some firms will leave the industry and price will fall
d. Some firms will enter the industry and price will fall
QUESTION 4In oral auctions, the price that the winner pays depends on
a. The winner's willingness to pay
b. The highest willingness to pay among the losers
c. The lowest willingness to pay among the losers
d. None of the above
QUESTION 5A perfectly competitive firm has
a. A perfectly elastic demand for its products
b. A perfectly inelastic demand for its products
c. A downward sloping demand for its products
d. None of the above
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