Eon-E251 FINAL
In the long-run, if firms in a perfectly competitive market are incurring economic losses, then: A) some firms will leave the market & the price will rise B) some firms will leave the market & the price will fall C) new firms will enter the market & the price will rise D) new firms will enter the market & the price will fall
A
Jane makes the statement "The cost of books has increased 100% over the past year" she is: A) making a positive statement B) making a post hoc fallacy c) testing an economic model d) facing a tradeoff of book cost last year & this year e) making a normative statement
A
"Every time I wear my school's colors on sunday, our team wins its football game" is an example of a) post hoc fallacy b) a normative economic statement c) an opportunity cost for winning football games d) fallacy of composition e) centeris partibus fallacy
A
A decrease in the price of eggs from $1.50 to $1.30/dozen resulted in an increase in egg purchases in 2 cities. In Philly, daily egg purchases increased from 6000 to 8000 dozens; in nearby Dover, Delaware, daily egg purchases increased from 300 to 400 dozens. The price elasticity of demand is therefore: A) the same in Philly as in Delaware B) certainly affected by population differences in different markets C) lower in the smaller city as would be expected D) greater in the smaller city as would be expected
A
A patent grants A) an exclusive right to an investor of a product B) the right to practice a profession C) a guarantee of quality to consumers D) control over a unique source or supply of raw materials
A
A perfectly competitive firm will have an economic profit of zero, at its profit-maximizing output, its MR = its A) ATC B) MC C) AFC D) AVC
A
An externality can be a cost or benefit arising from the production of a good that falls upon A) someone other than the consumer or producer B) consumers but not producers C) both the consumer & the producer D) producers but not consumers
A
As an economy's labor force attains more skills & abilities in production of goods & services, the economy A) experiences economic growth & their production possibility frontier shifts out B) generally decides to engage in international trade C) generally experiences increased unemployment of other resources, such as labor D) gains an absolute advantage in the production of capital goods E) experiences an economic decline & their production possibility curve shifts in
A
As firms enter a perfectly competitive market, the price: A) falls & the existing firms' economic profit decreases B) rises & the existing firms' economic profit decrease C) falls & existing firms' economic profits do not change D) falls & the existing firms' economic losses do not change
A
Beef and leather belts are complements in production. If people's concern about health shifts the demand curve for beef leftward, the result in the market for leather belts there will be: a) a higher equilibrium price for a leather belt that results in a dec. in supply of leather belts b) no change in equilibrium price c) a higher equilibrium price for a leather belt that results from an inc. in supply of leather belts d) a lower equilibrium price for a belt that results from an inc. in supply of belts
A
Betty is buying a new machine for her canoe factory. She is increasing what type of resource in her business? A) physical capital B) land C) entrepreneurship D) human capital E) finanical
A
Considering only candy bars & fast food meals, if the price of a candy bar is $1 and price of a fast food meal is $5, we can say: a) the *relative* price of a fast food meal is $5 b) the *money* price of a candy bar is 5 of a fast food meal c) the *money price* of a fast food meal is 1/5 a candy bar d) the *relative* price of a candy bar is 5 fast food meals
A
Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct? A) Both H & T would be better off if H specialized in fish & T specialized in fruit B) Both H & T would be better off it H specialized in fruit & T specialized in fish C) only H would be better off if H spec. in fish & T in fruit D) only H would be better off if H spec. in fruit & T in fish
A
If firms in a perfectly competitive industry are making 0 economic profit, then A) there is no incentive for entry or exit B) some of the firms will temporarily shut down C) new firms will enter because new entrants would be ensured of doing well as in their best foregone alternative D) some of those firms will leave the industry because firms persistently cannot go without making an economic profit
A
In the economic model of a purely competitive market, firms are said to produce a homogenous product. This means that A) the product of one producer is a perfect substitute for the product of any other producer B) a federal gov't agency must inspect products for safety & purity C) the quality of products produced under conditions of pure competition is lower than that of products produced in monopoly enterprises D) all producers of a good use the same tech & production techniques
A
Jed had an exam score of 50 percentage points. There is an extra credit assignment that Jed can complete that will raise his exam score by 20 percentage points. Jed has determined that the extra credit assignment will take 10 hours of his time. Jed will complete the assignment if he values the a) 20% points over the 10hrs of his time b) wants a higher score c) additional 20% points more than his first 50% points d) 10hrs of his time more than the 20% points e) 70% points more than the 10hrs of his time
A
La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals & even the late Julia Child found the food delicious. If La Super Rica is making an economic profit, what is the probable outcome in the taco market.? A) the number of firms will increase, decreasing La Super Rica's demand B) the number of firms will decrease, decreasing La Super Rica's demand C) the number of firms will decrease, increasing La Super Rica's demand D) the number of firms will increase, increasing La Super Rica's demand
A
Monopolistic competition is defined as a type of a market structure where A) many firms produce the good B) there are barriers to entry C) firms produce a homogeneous good D) firms can earn positive profit in the long-run
A
Monopolistic competition is defined as a type of market structure where A) many firms produce the good B) there are barriers to entry C) firms produce a homogeneous good D) firms can earn a positive profit in the long-run
A
Monopolistically competitive firms constantly develop new products in an effort to A) increase the demand for their product B) increase the MC of their product C) make their competitor's demand curve more inelastic D) make the demand for their product more elastic
A
One economic justification for government to give patents to investors is A) to encourage discovery of new goods that is based on the idea that property rights create incentives & increase knowledge B) to concentrate research in a few well established firms that can be more easily regulated C) to reduce competition among firms D) to protect politically favored monopolies E) to reduce the use of vouchers
A
The price elasticity demand for oil is estimated at 0.05. This value means a 10% increase in the: A) price of oil will decrease the quantity of oil demanded by 0.5% B) quantity of oil demanded will result from a 0.5% decrease in the price of oil c) quantity of oil demanded will result from a 0.5% increase in the price of oil d) price of oil will increase the quantity of oil demanded by 0.5%
A
The price elasticity of demand for oil is estimated at 0.05.. This value means a 10% increase in the: A) price of oil will decrease the quantity of oil demanded by 0.5% B) quantity of oil demanded will result from a 0.5% decrease in the price of oil C) quantity of oil demanded will result from a 0.5% increase in the price of oil D) price of oil will increase the quantity of oil demanded by 0.5%
A
When a production quota is used to remedy the problem of the commons, then: A) all users of the resource have an incentive to cheat on the quota quantity B) the market equilibrium, but not the effective outcome, is achieved C) the production quota is set so that use of the resource is where marginal private benefit = marginal private cost D) the production quota is set so that use of the resource is where marginal social benefit = marginal private cost
A
Which of the following cannot be an effective entry barrier? A) a firm making very high economic profits B) a firm owning all of the vital resource needed to produce a good C) when huge economies of scale increase D) a firm being granted a patent for its product
A
Which of the following is the BEST example of a public good? A) national defense B) fish in the ocean C) cable TV D) can of Mtn. Dew
A
consumers come to expect that the price of a gallon of gas will decrease next week. As a result, you would expect: a) today's demand for gas to decrease b) today's demand for gas to increase c) next week's supply of gas to decrease d) today's supply of gas to increase e) the price of gas to increase today
A
A characteristic of monopolistic competition is that each firm A) faces perfectly elastic demand B) has perfectly inelastic supply C) faces a downward sloping demand curve D) has perfectly elastic supply
C
In an 8hr day, Andy can produce either 24 loaves of bread of 8 pounds of butter. In an 8hr day, Adam can produce either 8 loaves of bread or 8lbs of butter. We know Andy has a comparative advantage in production of: A) butter; while Adam has a comp. advantage in bread B) bread; while Adam has a comp. advantage in butter C) both bread & butter D) bread & neither has comp. advantage in butter
B
An externality occurs when: A) the MSC of an activity increases as that activity is increased B) some of the costs of producing a good are paid by someone other than the producer C) the costs of producing a good are paid by someone other than the producer D) both A &C
B
Dole Co. operates in a monopolistically competitive market. To try to earn an economic profit, Dole Co. will A) increase its product's price B) continually seek to differentiate its product C) prevent other firms from entering the market D) increase output
B
Economists are critical of monopolies because A) monopolists can earn long-term economic profit B) monopolists can create a deadweight loss C) economies of scope result in lower average costs D) the demand for the monopolist's product is the market demand curve
B
Free riding: A) is a characteristic of private goods B) is possible if the consumption of a good is characterized by nonexcludability C) occurs when consumers pay too much for services provided by the gov't D) is possible if the consumption of a good is characterized by excludability
B
If a firm in purely competitive market attempted to charge a price that is above the market price, it would A) make large profits & force the other firms to either raise their prices or leave the industry B) not be able to sell any of its product C) have slightly lower sales but a higher profit per unit; as a result profits would increase D) none of the above
B
John receives a marginal benefit of $80 from one missile. Nick receives a marginal benefit of $50 from one missile. Christina receives a marginal benefit of $65 from one missile. John, Nick, and Christina are the only people in the economy. What is the economy's marginal social benefit from one missile? A) $80 B) $195 C) $50 D) $65
B
Suppose a drought destroys much of the U.S. orange crop. Also, during this time, the number of buyers of oranges increases. Additionally, the drought effect is anticipated to be much less in size than the buyer effect. Accordingly, the equilibrium price of oranges will ____ and the equilibrium quantity will _____ A) decrease; increase B) increase; increase C) increase; be indeterminate D) be indeterminate; decrease
B
Suppose the city of Baton Rouge, LA has spent $500k on a dam project. The estimated revenues to be generated from the completed dam plus the benefits of flood control are $1mill. When the project began last year, the cost estimates were $800k. Now, the cost estimates are projected to be $3mill. What should the city do? A) they should try and increase the estimated revenue figure B) they should stop production on the dam C) the city would be indifferent in finishing or ceasing production on the dam D) the city should continue building the dam. It has already spent $500k
B
The cost of production an additional unit of a good or service that is borne by the producer of the good or service is the: A) marginal social cost B) marginal private cost C) marginal external cost D) none of the above
B
The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. In the long-run, the firms will _____ the market & the market ______ will _____ A) enter; supply; decrease B) enter; supply; increase C) leave; supply; decrease D) leave; demand; decrease
B
a movie shown on pay-per-view cable station is an example of A) a non-excludable & non-rival good B) a excludable & non-rival good C) a non-excludable & rival good D) a excludable & rival good
B
in the long-run equilibrium, perfectly competitive firms earn 0 economic profit because of A) inefficient production processes B) the ability of firms to enter & exit C) high fixed costs D) government regulations
B
the fact that you may not know who your congressional representative is represents A) the rival nature of info B) rational ignorance on your part C) the use of the median voter theorem D) inefficient oversupply of public servants
B
when government action leads to inefficiency, it is known as: A) lack of government trust B) government failure C) government as usual D) politics
B
A firm has excess capacity if its output is A) less than the quantity at which MC is minimized B) less than the quantity at which economic profit is maximized C) less than the quantity at which ATC is minimized D) more than the quantity at which ATC is minimized
C
A firm in a monopolistically competition can determine what price to charge for its product because of _____ A) barriers to entry B) economies of scale C) product differentiation D) the fact that there are many buyers
C
A firm's short-run ATC eventually slopes upwards because of the A) reductions in AFC B) increase in capital costs C) law of diminishing returns D) decrease in labor costs
C
A monopoly that sells every unit of its output at the same price is a A) legal monopoly B) unit-price monopoly C) single-price monopoly D) natural monopoly
C
A school of swimming tuna in the ocean is: A) nonexcludable & nonrival B) excludable & rival C) nonexcludable & rival D) excludable & nonrival
C
Advertising costs of a monopolistically competitive firm are A) greater than a monopoly & the same as a perfectively competitive firm B) less than a perfectly competitive firm C) greater than a perfectly competitive firm D) the same as a monopoly
C
Both firm A and firm B emit 300 tons of pollution. Suppose both firm A and firm B have permits that allow each to emit 100 tons of pollution. If it costs $5,000 for firm A to eliminate 100 tons of pollution and it costs firm B $6,000 to eliminate 100 tons of pollution, then A) firm B will sell its permits to firm A for a price > 6,000 B) firm A will sell its permits to firm B for a price > 6,000 C) firm A will sell its permits to firm B for a price < 6,000 D) firm B will sell its permits to firm A for a price < 6,000
C
Compared to a single-price monopolist, a price-discriminating monopolist: A) generates a larger deadweight loss B) produces less output C) produces more output D) generates more consumer surplus E) produces the same amount of output
C
Economic efficiency occurs when the firm produces a given output A) by using the least amount of inputs B) at the greatest cost C) at the least cost D) by using the maximum amount of inputs
C
Government failure, when government actions lead to inefficiency, can result in: A) over provision B) under provision C) both A & B D) neither A or B
C
If the absolute value of the price elasticity of a demand for peaches is 1.76 & the absolute value of the price elasticity of demand of for apples is 1.59, then we can conclude consumers are A) more sensitive to a change in the quantity of peaches than quantity of apples B) less sensitive to a change in quantity of peaches than Q of apples C) more sensitive to a change in the price of peaches than they are to a change in the price of apples D) less sensitive to a change in the price of peaches than they are to a change in the price of apples
C
If there are 1,000 rutabaga farms, all perfectly competitive, an increase in the price of fertilizer will: A) have no effect on the total quantity of rutabagas supplied, because each farm's supply curve is a vertical line B) reduce the quantity supplied, because each farm's supply curve is a horizontal line & will shift upward C) decrease the total quantity supplied, because each farm's supply curve shifts leftward D) have no effect on the total quantity supplied because no farm has enough market power to raise the price
C
Monopolistic competitive firm has ____ power to set the price of its product because ____ A) no; of product differentiation B) no; there are barriers to entry C) some; of product differentiation D) some; there are barriers to entry
C
Most movie theaters charge different prices to different groups of customers for movie admission but not on movie popcorn. Which of the following is a reason for this? A) because the demand on movie popcorn is very high relative to the demand for movie admissions B) because the markup on movie popcorn is very high & movie theaters do not want to forego this source of revenue C) because it is easier to limit arbitrage in movie admissions but not in popcorn sales D) because the cost of operating a concession stand in movie theaters are high compared to the showing of a movie
C
Suppose the government of IN state promises to decrease taxes to a firm if it decides to stay in IN instead of moving to another state. This policy on the part of the state constitutes ____ to make the _____ of the firm remaining in IN. a) a command; MB exceeds MC b) an incentive; MC exceeds MB c) an incentive; MB exceeds MC d) a command; MC exceeds MB
C
The (absolute value of) price elasticity of demand for grape juice equals 1.8 if: A) a rightward shit of the demand curve for grape juice causes the price increase by 1.8% B) for every $1 that the grape juice increases, consumers desire 1.8 fewer units C) for every 1% that grape juice increase in price, consumers desire 1.8 fewer units D) for every 1.5% that grape juice increases in price, consumers desire 1% fewer units E) a rightward shift of the demand curve for grape juice causes a 1.8% increase in the quantity of grape juice sold
C
The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. After the demand increases, a typical firm will A) incur an economic loss B) make 0 economic profit C) make an economic profit D) exit the market
C
The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. What happens in the short run? A) some of the existing firms shut down B) the firms will decrease production C) the firms increase production D) firms will enter the market
C
The presence of external diseconomies would _____ each total firm's costs as the industry output ____ & the presence of external economies would _____ each firm's total costs as industry output_____ A) lower; increases; lower; decreases B) lower; decreases; lower; increases C) raise; increases; lower; increases D) lower; increases; lower; increases
C
The tragedy of the commons is the absence of incentives to: A) discover the common resource B) correctly measure the marginal social benefit from a common resource C) prevent overuse & depletion of a common resource D) prevent under use of the common resource
C
in the political market place, typical voters: A) support policies they think will make the poor better off B) fire bureaucrats who support efficient policies C) are sometimes rationally ignorant about a policy D) are fully informed
C
the main reason why free riding is not a problem in the market for a good that is characterized as a private good is because the A) good is rival in consumption B) market eliminates the problem of externalities C) good is price excludable D) good is non-rival in consumption E) good is price non-excludable
C
the opportunity cost of economic growth is A) future consumption that a nation gives up to consume more today B) investment that a nation gives up to increase its econ growth C) present consumption that a nation gives up to accumulate capital D) future consumption that a nation gives up some present consumption
C
"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the A) demand curve for pumpkins shifted to the left B) demand curve for halloween costumes shifted to the left C) price elasticity of demand for pumpkins decreased from its value in previous years D) total revenue from the sale of pumpkins decreased
D
In the short tun, a perfectly competitive firm A) produces at any price B) always makes an economic profit C) never incurs an economic loss > than its AFCs D) can either make an economic profit, incur an economic loss, or make 0 economic profit
D
A hamburger is $3 and a soda is $2. Your budget is $12. You have already purchased and consumed 1 soda & 1 hamburger. Now you are trying to decide what to eat next. The marginal utility of the next soda is 24 & the second hamburger is 30. In regards to your next purchase only, you should: A) not eat or drink anymore B) either option but only one over the other. You are indifferent to either option. C) eat another burger D) drink another soda
D
A monopolistically competitive firm is like a perfectly competitive firm insofar as both A) are protected by high barriers to entry B) have negatively sloping demand curves C) have horizontal MR curves D) can make 0 economic profit. in the long run
D
A perfectly competitive firm is *definitely* earning an economic profit when A) MR=MC B) P<ATC C) P=ATC D) P>ATC
D
A system of property rights: a) discourages econ growth by discouraging development of new ideas & ways of doing things b) encourages investment but discourages entrepreneurial activity, so the effect on econ growth is sudden c) reduces efficiency of gov't, which reduces the growth rate of the economy over time d) encourages economic growth by creating incentives to invest in capital & to be innovative
D
A university conducts a survey of students, which shows a 10% tuition hike would lead to a 7% decrease in enrollment. If the university wants to increase its total revenue, it would ___ tuition because the demand for education at this university is ____ A) raise; elastic B) not raise; inelastic C) not raise; elastic D) rasie; inelastic
D
After a 10 cent tax is imposed on suppliers of soda, the market price of soda increased. Suppose, in relevant price range, the demand for soda is relatively more elastic than the supply. We can conclude that A) buyers will pay a larger share of the tax B) sellers pay the entire tax C) both buyers & sellers pay the same share of tax D) buyers pay a smaller share of the tax than sellers E) buyers pay the entire tax
D
After graduation, you accept a position working for Bureau of Labor Stats for 45000/yr. Other 2 offer were for Walmart at 38000/yr & Ernst & Young for 42000/yr. Of these two, you would have preferred the job at Ernst & Young. What is opportunity cost of accepting the job at the Bureau? a) the 45000 paid for working at the Bureau b) the 38000 you would have been paid at walmart c) the 42000 you would have been paid at E&Y and the 38000 from walmart d) the 42000 you would have been paid at E&Y e) none of the above
D
An increase in the wage rate of labor would A) cause the ATC curve to shift either up or down depending on how large the wage increase is B) have no effect on the ATC curve C) cause the ATC curve to shift down D) cause the ATC curve to shift up E) none of the above
D
Beautification of the national highways through the planting of shrubs and wildflowers will A) provide flow of services that involve excludable consumption B) be profitable for a private landscaping company because they can charge passing drivers C) provide a flow of services that are rival in consumption D) benefit even people who do not help pay
D
Compared to a single price monopolist, a price-discriminating monopolist A) produces the same amount of output B) generates more consumer surplus C) generates a larger deadweight loss D) produces more output E) produces less output
D
DVDs & CDs are substitutes in production & not related in consumption. If there's an increase in the demand for DVDs and increase in market price for DVDs, we would expect: a) an increase in Q.S. of CDs but not in the supply b) a decrease in Q.S. of CDs but not in the supply c) an increase in supply of CDs d) a decrease in the supply of CDs
D
If there is a permanent decrease in demand for a perfectly competitive market, then there is an initial _____ in price & existing firms ___ A) rise; make an economic profit B) rise; incur an economic loss C) fall; make an economic profit D) fall; incur an economic loss
D
In a monopolistically competitive industry, the firms are currently making an economic profit.When this market moves to its long-run equilibrium, the firms' demand curves will have ________ and their economic profit will have ________. A) remained the same; decreased to 0 B) shifted rightward; decreased to 0 C) shifted leftward; decreased but remain > than 0 D) shifted leftward; decreased to 0
D
In the short run, perfectly competitive firms ____ but in the long run they ____ A) can incur economic loss; incur economic loss B) can incur economic loss; make an economic profit C) must make an economic profit; make an economic profit D) can incur economic loss; make 0 economic profit
D
Marginal social cost is equal to the A) MC imposed on others B) MC incurred by the producer of the good C) sum of private cost & marginal private benefit D) sum of marginal private cost & marginal external cost
D
Monopolistic competition is a market structure in which A) a small # of firms compete B) each firm produces an identical product C) firms only compete on product price D) firms are free to enter or exit
D
Price discrimination, where different units of a good are sold for different prices A) can be effectively practiced by all monopolists B) maximizes consumer welfare because each consumer pays only the price s/he is willing to pay C) is. impossible because there can be only 1 market price D) is possible if the good cannot be resold
D
Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the A) marginal cost B) marginal social cost C) marginal private cost D) marginal external cost
D
Suppose firms in a perfectly competitive market are incurring an economic loss. Over time: A) other firms enter the market, so price rises & economic loss decreases B) other firms enter the market, so the price falls & economic loss decreases C) some firms leave the market, so the price falls & economic loss decreases D) some firms leave the market so the price rises & economic loss decreases
D
Suppose that soup is an inferior good. If consumer income declines at the same time that the # of soup suppliers increases, then the equilibrium price will ___ and the equilibrium quantity will ___ A) be indeterminate; decrease B) decrease; decrease C) increase; be indeterminate D) be indeterminate; increase
D
Suppose the price of burgers increases from $2 to $3. The degree to which QD responds to the price increases depends on the a) the price elasticity of supply b) income elasticity of demand c) cross elasticity of demand d) price elasticity of demand
D
The demand for corn increases. As a result, the price of corn will ___ and the less elastic the supply of corn, the ____ will be the effect on the price. A) fall; greater B) fall; smaller C) rise; smaller D) rise; greater
D
The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve ___, the market price _____, and each firm's economic profit ______. A) leftward; rises; decreases B) leftward; falls; decreases C) rightward; rises; decreases D) rightward; falls; decreases
D
The price elasticity of demand depends on the values of the goods price and quantity relationship: a) and the units used to measure price, but not quantity b) and the units used to measure price and quantity c) and the units to measure quantity but not price d) but does not depend on the units to measure price nor quantity
D
Tom's Lawn Care is a perfectly competitive firm that currently services 25 laws a week and is earning a positive economic profit. Tom's short run MC is higher than the price he charges. Tom will increase profit if he A) services fewer than 25 lawns a week B) charges a higher price C) services more than 25 lawns a week D) reduces his work force in order to reduce his costs E) charges a lower price
D
When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good a) produces a convex shaped curve b) cannot be determined c) decreases in terms of amount foregone of the other good d) increases in terms of amount foregone of the other good e) remains constant
D
Which of the following is NOT a factor of production? A) cattle B) the *management skill* of a small business owner C) the *water* used to cool a nuclear power plant D) the *wages* paid to workers E) the *effort of farmers* raising cattle
D
Suppose you observe the price of tomatoes decreases after supply for tomatoes increases. You then observe that people buy more lettuce at any price. These observations suggest that lettuce and tomatoes are: a) normal goods b) substitutes in consumption c) compliments in production d) inferior goods e) complements in consumption
E
Whenever the total product curve is increasing at a decreasing rate, A) marginal product must be falling B) diminishing returns have been reached C) average product must be falling D) MC is falling E) Both A & B
E
suppose firms in a competitive industry are incurring an economic profit that is < 0 (a loss). As the industry adjusts to the long-run, the market price ___ and the economic price of the surviving firms ___ A) falls; increases B) falls; decreases C) rises; decreases D) remains the same; decreases E) rises; increases
E
True or False? If a profit maximizing firm in a perfectly competitive market is making an economic profit, then it must be producing at a level of output where price > ATC.
True
The ultimate cost of any choice is:
the highest-valued alternative forgone
