(b) Firn LRMC P. AT LRAC A firm using adverising differs from a firm not using a
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Question
(b) Firn LRMC P. AT LRAC A firm using adverising differs from a firm not using advenising in that the firm using adverising will give complete and accurate information to consumers b. will have a demand curve that must shift to the righ c. will always obtain lower ATC d vwill always be able to obtain an increase in output. e. may find that advernising resuls in higher ATC Quantity Quantity Bascd on the figure above, which of the following statements is true about this compctitive industry in the long run? a. The market supply curve will be S5 and all firms will opcrate at a Advertising a. always increases prices. b. reduces prices , is nou practiced in a perfectly competitive markeu. d. leads to greater efficiency e. leads to greater inelficiency b· The market supply curve will bc S3 and only those firms operating c. The market supply curve will be S1 and only those firms operating d. The market supply curve will be S2 and firms will be forced to e. All firms will go out of business and the industry will cease to plant size of ATC1 with a very large plant size will earn an economic profit. at plant size ATC2 will survive. operate with plant sizes of ATC3. A price-discriminating monopolist a. produces quality prov cts only b. does not sell products to minority groups c. must have a very large opcration. d.sells the same product in differen! markets al diferent prices. exi would not cngage in dumping. In the long run, if a perfectly competitive industry has some firms earn- ing an economic profit, then we can expect a. the economic profits of other firms to be negative. b. the market supply curve to shift to the left, decreasing market price The,price elasticities of demand for phamaceuticals differs among the eight customer classes. If AARP has the most elasic demand of the cight customer classes, it will a. receive the grealest quantity of pharmaceuticals. b. receive the smallest quantity of pharmaccuticals. c. receive the phamaceuticals at the lowest price d. receive the pharmaceuticals at the highest price e. be unable to obtain pharmaceuticals and increasing market output C, the marginal cost curve to shift down and less output to be pro- duced by each firm in the industry d. fewer firms in the industry. e. more firms in the industry. In the long run, in a perfecly compeitive indusury we can expect a. economic profits to be earned. b. market price to rise if economic profits are carned. c. economic losses to be incurred. d. only a normal or zero economic profit level to be eaned. c. market price to fall if economic losses are incurred. For effective price discrimination, the monopolist does not have a. be earning a positive economic profit. b. be able to prevent the resale of the product by the original buyers. c. be a price maker d. be able to separate buyers into diflerent markets with difterent price elasticities. be a profit-maximizing firm. e. Which of the following would NOT differentiate the product of firm X from the product offered by firm Y? a. exclusive sales oudcts for products of firm X b. the brand label of the product of firm X c. tcchnical differences in the product of firm X d. the reputation of firm X e. a lower price for products from firm X 34 2 Which of the following statements is false concerning monopolistic pctition? Fims produte slighly different products Prics cquals average toual cost in the long run. a) Marginal revenue is less than average revenue · There is an absence of nonprice competition. d· The firm faces a downward-sloping demand curve.Explanation / Answer
Ans)
31.
c. the market supply curve will be S1 and only those firms operating at plant size ATC2 will survive.
In the long run the firms operate in the minimum of the ATC2 Hence the supply curve will be S1.
32.
e. more firms in the industry
If there is an economic profits more firms will enter the industry the firms will keep entering till all the excess profits are absorbed.
33.
d.only a normal or zero economic profit level to be earned.
In perfect competition in the long run firms earn zero economic profit.
34.
e. a lower price for products from firm X.
Product differentiation does not happen because of price.
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