Suppose a firm’s ATC is at its lowest value when the firm produces 12,000 units of output. If the firm operates in a typical monopolistic competitive market, then this firm will likely produce 12,000 units of output in the long run. If this firm operates in a typical perfectly competitive market, then the firm will likely produce more than 12,000 units of output in the long run.

true or False

The efficient scale for any firm is the level of output at which the average-total-cost curve is tangent to the demand curve.

True or False

Question text

In the long run, when a firm's demand curve is tangent to its average total cost curve, the firm could be a monopolistic competitor but not a perfect competitor.

True or False

When a profit-maximizing firm in a monopolistic competitive market is in long-run equilibrium, the firm operates at excess capacity since an increase in production would reduce average total cost.

True or false

1. Air travelers are sometime annoyed to find that the price of a ticket for a short flight may exceed the price for a long flight. For example, a round-trip ticket from Chicago to Washington Seattle on the airline recently cost $235, compared with the same airline’s price of $278 from Chicago to Moline, which is just less than half an-hour flight, about 160 miles. Travelers complain that such prices represent unfair discrimination against the residents of a medium sized cities such as Moline or Davenport, Iowa. They say that airlines should charge prices that are proportional to the distance flown. The airlines answer that they can serve major city pairs, such as Chicago, Seattle, at a lower cost (with larger planes and fewer empty seats) than less frequently traveled city pairs, such as Chicago – Moline. Do you see the airlines pricing policy in this example as true price discrimination? Discuss the merits of the current price structure and proposed alternative in terms of fairness and efficiency.

The Federal Reserve (the Fed) is the central bank of the United States with the power to create money. When the Fed decides to increase the money supply by creating more money, how do they go about doing this? What role do banks play in this process? Where does the money come from to pay for all their purchases?

Assume an oligopolistic market with one large dominant firm. The dominant firm's marginal cost is given by the following equation:

MC = 0.46 Q

The market demand is the following: QD = - 13 P + 261

The supply of the smaller firms combines is given by the following equation:

QS = 24 P + 168

What would be the combined production of the small firms?

What economic forces and political events coalesced to shape California into the demographically diverse and “opportunity-focused” place it became (and remains)?

Explain 8 or more sentences.

Assuming an increase in demand for export goods, explain the change in demand curve and labor supply, if any.

What the issues faced by government policymakers in their attempts to maintain full employment. Please explain in more detail.

Please explain the travel distribution model and what are its 3 basic categories?

Which features distinguishes new growth theory compared to Solow's growth theory? Define those features in terms of the AK & Lucas model.

Explain two different institutions and/or policies that can affect the growth of real wages and the unemployment rate (ie. institutions and policies for increasing output and decreasing unemployment rate)

A country’s GDP is being measured by expenditure. Various categories of expenditure are recorded as follows: Households’ spending on consumption = $100bn, Firms’ spending on capital goods = $15bn, Firms’ addition to inventories = $1bn, Government spending on services = $10bn, Government spending on capital goods = $2bn, Government transfers (social security etc) = $10bn, Exports = $12bn, Imports = $10bn. What is the correct estimate of GDP?

What is the increase in unemployment above equilibrium unemployment caused by a fall in aggregate demand associated with the business cycle?