Question

28.   Firms will continue to enter a competitive industry until, in the LR,
   a.   firms are making a fair rate of return
   b.   the supply curve is meaningless
   c.   all economic profits have been competed away
   d.   (a) and (c) above are both correct
 

30.   When positive externalities exist in a competitive market, the competitive output will be larger than QSO. True or False?

31.   One reason economists object to monopoly is
   a.   monopolies overproduce to maximize profits
   b.   monopolies always produces the technically efficient output level
   c.   monopolies may not produce the technically efficient output level
   d.   none of the above

32.   When decreasing returns to scale are present
   a.   LR costs per unit decline as output expands
   b.   the government feels responsible for breaking up the firm
   c.   firms always make handsome profits
   d.   LR costs per unit increase as output expands

33.   In a perfectly competitive industry
   a.   the firm can affect prices but the industry cannot
   b.   the industry can affect prices but the firm cannot
   c.   neither the firm nor the industry can affect prices
   d.   both the firm and the industry can affect prices

34.   A rational student would go on to college after high school if his/her extra (discounted) lifetime earnings arising from getting a college degree is greater than the opportunity costs of getting the degree. True or False?

35.   A firm’s economic profits will be larger than its accounting profits when it has implicit costs. True or False?

12.   If the demand curve of a competitive firm is tangent to the low point on the AVC curve, the firm’s profits are the same whether it shuts down or produces. True or False?

13.   Monopolistic competition is common in
   a.   retail selling
   b.   farming
   c.   basic manufacturing
   d.   electric power generation

14.   The SR market supply curve for a competitive industry is obtained by
   a.   horizontally summing the SRMC curves (above AVC) of all firms in the industry
   b.   vertically summing the supply curves of firms in the industry
   c.   horizontally summing the supply curves of all firms in the industry
   d.   both (a) and (c) above are correct
   e.   none of the above

15.   In the shortrun, total costs are not zero when output is zero because
   a.   marginal costs can be negative at small outputs
   b.   there are some costs that must be paid regardless of the level of output
   c.   profits must be paid to stockholders
   d.   (a) and (b) above are both correct

16.   Wendy can sell six motor homes per week at $20,000 each. If she limits her sales to five homes per week, she can get $22,000 a piece. Thus, her MR is
   a.   equal to her total profits
   b.   greater than her price
   c.   less than her price
   d.   equal to her price
   e.   none of the above

31.   One reason economists object to monopoly is
   a.   monopolies overproduce to maximize profits
   b.   monopolies always produces the technically efficient output level
   c.   monopolies may not produce the technically efficient output level
   d.   none of the above

32.   When decreasing returns to scale are present
   a.   LR costs per unit decline as output expands
   b.   the government feels responsible for breaking up the firm
   c.   firms always make handsome profits
   d.   LR costs per unit increase as output expands

33.   In a perfectly competitive industry
   a.   the firm can affect prices but the industry cannot
   b.   the industry can affect prices but the firm cannot
   c.   neither the firm nor the industry can affect prices
   d.   both the firm and the industry can affect prices

34.   A rational student would go on to college after high school if his/her extra (discounted) lifetime earnings arising from getting a college degree is greater than the opportunity costs of getting the degree. True or False?

35.   A firm’s economic profits will be larger than its accounting profits when it has implicit costs. True or False?

Answer 1

28. d.   (a) and (c) above are both correct
(Firms continue to enter in the LR until they earn a fair return and there are zero economic profits.)

30 False
(Competitive output will be smaller than the QSO.)

31. c.   monopolies may not produce the technically efficient output level
(Monopolies underproduce to maximize profits so they may not produce the efficient output level.)

32. d.   LR costs per unit increase as output expands
(Per unit costs are increasing under DRS.)

(Note: As HOMEWORKLIB's policy, 4 MCQs are to be answered at a time.)