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By shutting down when price is less than average variable cost at the profit-maximizing level of...

By shutting down when price is less than average variable cost at the profit-maximizing level of output, a perfectly competitive firm will limit its losses to its:
A) total variable costs.
B) total costs.
C) total fixed costs.
D) marginal costs.
Answer:
9) Assume that goods X and Y are substitutes and are produced in perfectly competitive markets. All else constant, in the short run, a decrease in the supply of good X would cause:
A) an increase in the demand for good Y.
B) a decrease in the demand for good Y.
C) an increase in the supply of good Y.
D) a decrease in supply of good Y.
Answer:
10) Industry X, which is perfectly competitive, is in long-run equilibrium. Assume a new law is passed that requires employers in industry X to provide health insurance to previously uninsured employees. As a result of this new requirement we would expect to observe:
A) a decrease in price and an increase in total output in industry X.
B) a decrease in price and total output in industry X.
C) an increase in price and a decrease in total output in industry X.
D) an increase in price and total output in industry X.
Answer:
11) All of the following are possible characteristics of a monopoly except:
A) there is a single firm.
B) the firm is a price taker.
C) the firm produces a unique product.
D) the existence of some advertising.

Solutions

Expert Solution

Q8.
Answer is C. Total Fixed cost
Q9.
Answer is A. Increase in demannd for Good Y
Explanation: Decrease in supply of Good X will increase the pricec of Good X.
And the c onsumer will buy less f Good X and more of Good Y
Therefore, demand for Good Y increases.
Q10.
Answer is C. Increase in price and decrease in Total output in Industry X
Explanation:
Cost of input increase resulting n decrease n supply. Results in Price increase.
Which will further results in decreasse in demand
Q11.
Answer is B. The firm is a price taker

jeff jeffy answered 2 years ago
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