MRU11.5: ENTRY, EXIT, AND SUPPLY CURVES: CONSTANT COSTS
Which of the following is NOT used in the video as an example of a constant cost industry? - Rutabagas - Domain name registration - Pencils - Housing
A: Housing
What feature is common to both an entire market and a representative firm when graphed alongside one another? - The demand curve - The marginal cost curve - The market price - The quantity produced
A: The market price
Which of the following features of Professor Tabarrok's illustration most demonstrated the assumptions of a constant-cost industry? - When new firms entered the market, the short run market supply curve shifted to the right. - When the short run market supply curve shifted to the right, the average cost curve did not move. - When the average cost curve shifted upward, the marginal cost curve shifted downward in response. - When the price exceeded the minimum of average cost, the profits encouraged new entry into the market.
A: When the short run market supply curve shifted to the right, the average cost curve did not move.
When a competitive market is in long-run equilibrium, _______ and _______. - no firms are profit-maximizing; no firms are suffering losses - no firms are profit-maximizing; no firms are earning a profit - all firms are profit-maximizing; no firms are earning a profit - all firms are profit-maximizing; all firms are earning a profit
A: all firms are profit-maximizing; no firms are earning a profit
An increase in market demand leads to: - a decrease in price, a decrease in profits, and then finally an increase in the number of firms in the industry. - an increase in price, an increase in profits, and then finally an increase in quantity supplied by existing firms. - an increase in price, an increase in profits, and then finally a decrease in the number of firms in the industry. - a decrease in price, a decrease in profits, and then finally a decrease in quantity supplied by existing firms.
A: an increase in price, an increase in profits, and then finally an increase in quantity supplied by existing firms.
In a constant cost industry, the demand for: - inputs makes up a very small part of the overall demand for those inputs across all industries. - capital makes up a very large part of the overall demand for that capital across all industries. - labor makes up a very large part of the overall demand for that labor across all industries. - output makes up a very small part of the overall demand for output across all industries.
A: inputs makes up a very small part of the overall demand for those inputs across all industries.
The _______ supply curve for goods in a constant-cost industry is going to be _______. - short-run; flat - short-run; downward-sloping - long-run; flat - long-run; upward-sloping
A: long-run; flat
If demand increases in a constant-cost industry, then in the long run there will be: - the same number of firms, each producing a higher quantity. - more firms, each producing a higher quantity. - the same number of firms, each producing the same quantity. - more firms, each producing the same quantity.
A: more firms, each producing the same quantity.
In response to profits in a market: - new firms will enter, shifting the supply curve outward, reducing the price, and eliminating the profits. - new firms will enter, shifting the supply curve inward, raising the price, and eliminating the profits. - some firms will exit, shifting the supply curve inward, raising the price, and increasing the profits. - new firms will enter, shifting the supply curve outward, raising the price, and increasing the profits.
A: new firms will enter, shifting the supply curve outward, reducing the price, and eliminating the profits.
In a constant cost industry, it is: - very easy to expand industry output without raising costs. - very difficult to expand industry output without reducing costs. - very difficult to expand industry output without raising revenues. - very easy to expand industry without raising revenues.
A: very easy to expand industry output without raising costs.
