Question

13. the assumption of rational self interest does not rule out the possibility of concern for other individuals.

14. In the short run all costs are fixed.

15. If a perfectly competitive firm is producing at a quantity at which MC< AVC, it cannot be maximizing profit in the short run.

17. A firm's supply curve is that portion of its average cost curve that lies above their marginal cost curve.

18. In the long run in perfect competition, no firm can earn a normal profit.

19. The sum of the marginal private cost and marginal external cost of production or consumption is known as the marginal social cost.

20. An example of a positive economic statement is, "An increase in the price of a product causes consumers to purchase more of that product."

Answer 1

13. True

It simply means that concern for others is influenced by some extent by the same economic forces that affect other economic choices.

14.False.

In short run both fixed and variable costs exists.The short run is a concept that states that, within a certain period in the future, at least one input is fixed while others are variable.

15. True

In order to maximize profits in a perfectly competitive market, firms set marginal revenue equal to marginal cost (MR=MC). MR is the slope of the revenue curve, which is also equal to the demand curve and price . In the short-term, it is possible for economic profits to be positive, zero, or negative. When price is greater than average total cost, the firm is making a profit. When price is less than average total cost, the firm is making a loss in the market.

17.False

A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost.