test 2

Assume a given amount of output can be produced by several small plants or one large plant with identical minimum per-unit costs. This long run situation reflects the existence of

constant returns to scale

The demand curve confronting a competitive firm is

horizontal , while makes demand is downward-sloping

a production function shows

how a firm's production changes as quantity of labor and other inputs changes

Which of the following is a characteristic of a perfectly competitive market

zero economic profit in the long run

Which the following statements about the relationship between economic and accounting costs is true

accounting costs are always less than or equal to economic costs

Which of the following affects both the marginal and average total cost curves of a firm in the short run?

a change in payroll taxes

If a perfectly competitive firm is producing a rate at which MC exceeds price, then the firm

can increase its profit by decreasing output

The average fixed cost (AFC) curve

declines as long as output increases

In a competitive market, if the market price is equal to the minimum point of the firms ATC curve, the firm may seek to earn economic profits by

decreasing production costs through technological improvements

In a competitive market where firms are earning economic profits, which of the following should be expected as the industry moves to long-run equilibrium, ceteris paribus

lower price and more firms

The behavior expected in a competitive market includes

marginal cost pricing

Which characterizes a firm that is in long-run perfectly competitive equilibrium where profits are maximized

price equals minimum ATC

The fact that a perfectly competitive firm's total revenue is an upward-sloping straight line implies that

product price is constant at all levels of output

A perfectly competitive firm is a price taker because

the price of the product is determined by many buyers and sellers