Question 1 Suppose the market price of lobster suddenly increases substantially.

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Question 1 Suppose the market price of lobster suddenly increases substantially. We can expect that most lobstermen will: spend fewer hours catching lobster and supply fewer lobsters. spend more hours catching lobster and supply more lobsters. not change the number of hours they spend catching lobster. there is no telling what lobsterman will do. . 3 points Question 2 All of the following are characteristics of perfectly competitive markets except: there are a large number of firms. productive resources are mobile. all firms produce a differentiated product. buyers and sellers are well informed. . 3 points Question 3 In a firm's production planning horizon, the "long-run" refers to a period of one year or more. the period during which all of the firm's inputs can be varied. the period during which at least some of the firm's inputs are fixed. the amount of time it takes a firm to double production. . 3 points Question 4 Assume Firm A has half the fixed costs of Firm B, but they have the same variable costs and total revenue for all quantities. Which of the following statements is true? Firm A will produce more than Firm B. Firm A will have double the profits of Firm B at every quantity. Firm A will produce the same quantity as Firm B. Firm A will produce less than Firm B. . 3 points Question 5 Suppose a barber shop that has fixed cost equal to $900/month and total costs equal to $4,000/month. This shop will continue to operate in the short run as long its total revenue is greater than: $4,000/month. $900/month. $4,900/month. $3,100/month. . 3 points Question 6 Assume a firm's average total cost equals $80 and average variable cost equals $70 at the current level of production. If the marginal cost of producing the next unit equals $75, then: average total cost will fall and average variable cost will rise. average total cost will fall and average variable cost will fall. average total cost will rise and average variable cost will fall. average total cost will rise and average variable cost will rise. . 3 points Question 7 A firm's accounting profit is given by total revenue: less implicit costs. less explicit costs. less economic profit. less implicit and explicit costs. . 3 points Question 8 In the long-run in perfectly competitive industries: firms cannot earn economic profit but economic rent can persist. firms can earn economic profit but economic rent cannot persist. firms cannot earn economic profit and economic rent cannot persist. firms can earn economic profit and economic rent can persist. . 3 points Question 9 Whenever a market is not in equilibrium: a transaction can be made that will make buyers better off, but make sellers worse off. a transaction can be made that will make sellers better off, but make buyers worse off. a transaction can be made that will benefit both buyers and sellers. no transaction can be made that will make either buyers or sellers better off. . 3 points Question 10 Price subsidies generally serve to: increase economic surplus and decrease consumer surplus in a market. decrease economic surplus and increase consumer surplus in a market. decrease economic surplus and decrease consumer surplus in a market. increase economic surplus and increase consumer surplus in a market. . 3 points Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Explanation / Answer

Q2. Perfectly competitive market has following characteristics -

1. There are large number of sellers in the market.

2. Each firm sells homogeneous or identical product.

3. Firms has freedom to enter and exit the market.

4. Buyers and sellers have perfect knowledge with respect to market conditions.

5. Factors of production are perfectly mobile.

6. There are no selling and transportation costs.

Hence, the correct answer is option 3 [All firms produce a differentiated product].

Q3. Long-run refers to the time-period with respect to production process in which all inputs can be changed. In other words, it is time horizon in which all inputs are variable and can be changed as per the change in output.

Hence, the correct answer is option 2 [The period during which all of the firm's inputs can be varied].

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