PLEASE ANSWER ALL THE QUESTIONS I ASK PLEASE 8) If there is constant returns to
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Question
PLEASE ANSWER ALL THE QUESTIONS I ASK PLEASE
8) If there is constant returns to scale in a competitive industry, then:
A) The long-run supply curve will be horizontal. B) An increase in demand will raise the average total cost of producing the good. C) The long-run supply curve will be downward sloping. D) Then an increase in demand will lower the price in the short run but raise it in the long run. E) Then an increase in demand will raise the price in the short run as well as raise the price in the long run.
10) If price is equal to minimum average total costs, then:
A) Firms will begin to shut down immediately. B) Firms will earn excess profits in the short run and in the long run there will be entry into the industry. C) Economic profits will be less than zero but firms will not exit because they earn normal profits. D) Economic profits will be zero but firms will remain in the industry because they earn normal profits. E) Economic profits are less than zero but firms are paying some of their fixed costs so they will continue to produce in the short term and exit in the long term when their fixed obligations have expired.
12) The shut down point is when:
A) A firm can no longer pay its debts. B) A firm can only earn normal profits. C) Price is below minimum average total costs. D) Price is equal to minimum average variable costs. E) Output falls below minimum marginal costs.
13) A monopolist can increase their profits by bundling their products because bundling allows them:
A) To price discriminate and charge consumers higher prices based on their willingness to pay. B) Create different varieties of their product at different price and quality levels. C) Create different varieties of their product at the same price and quality level. D) Create both different varieties of the product at different price and quality levels and at the same price and quality level. E) To force consumers to pay for products they have little use for to obtain something that has great value to them.
14) Schumpeter argued that monopolists eventually fall because:
A) Entrepreneurs find away to innovate around the monopolist's control over their market. B) Eventually an entrepreneur finds a way to compete directly with the monopolist. C) Consumers tire of the monopolist's product and they stop purchasing it. D) The government outlaws the monopoly. E) Consumers band together to counter the monopolist's control over the product.
15) A monopolist's price is:
A) Equal to their minimum average total cost in the long run. B) Equal to their marginal cost. C) Below their minimum average total cost in the long run. D) Above their marginal cost. E) Equal to their minimum average variable cost in the long run.
16) An example of price discrimination is when: A) A law firm provides better service to their wealthy clients. B) An airline charges fees for baggage. C) A country doctor charges his patients different prices for checkups based on their income. D) A software maker bundles their programs together rather then sell them separately. E) A car maker creates a new variety of their product at a higher price and quality level.
17) A monopolist never drops their price to the point where: A) They can only earn normal profits. B) It is below minimum average total costs. C) They earn almost no excess profits. D) Demand is elastic and marginal revenue is above zero. E) Demand is inelastic and marginal revenue becomes negative. 18) A monopolist can earn excess profits in the long run because: A) They can keep their price above their marginal cost. B) There are good substitutes for the product they produce. C) They can restrict output to raise their price. D) They have barriers to entry that prevent competition. E) They have the power to set their price. •
Explanation / Answer
Question 8) If there is constant returns to scale in a competitive industry, then:-
Answer:- Option A) The long-run supply curve will be horizontal.
Question 10) If price is equal to minimum average total costs, then:-
Answer:- Option D) Economic profits will be zero but firms will remain in the industry because they earn normal profits.
Question 12) The shut down point is when:
Answer:- Option C) Price is below minimum average total costs.
Question 16) An example of price discrimination is when:
Answer:- Option C) A country doctor charges his patients different prices for checkups based on their income.
Question 17) A monopolist never drops their price to the point where:-
Answer:- Option B) It (Price) is below minimum average total costs.
Question 18) A monopolist can earn excess profits in the long run because:-
Answer:- Option D) They have barriers to entry that prevent competition. [Entries to new firms are restricted in the monopoly form of market, thus there is no situation of competition for the monopolist in the long-run.]
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