If transaction costs are high, then it is more likely a firm’s demand curve is downward sloping. Indicate whether the statement is true or false ANSWER True . Transaction costs increase the costs for consumers to find a new firm. Thus, high transaction costs allow a firm to charge more than others.
Date: September 9th, 2020
If a firm makes zero economic profit, then the firm A) has total revenues greater than its economic costs. B) must shut down. C) can be earning positive business profit. D) must have no fixed costs. ANSWER C
Date: September 9th, 2020
The introduction of satellite television systems would cause the demand curve for cable television to be A) more elastic. B) less elastic. C) perfectly inelastic. D) unchanged. ANSWER A
Date: September 9th, 2020
If a monopoly can produce a good at zero marginal cost, then its Lerner Index is A) zero. B) one. C) infinity. D) undetermined. ANSWER B
Date: September 9th, 2020
A small business owner earns $50,000 in revenue annually. The explicit annual costs equal $30,000. The owner could work for someone else and earn $25,000 annually. The owner’s business profit is ________ and the economic profit is ________. A) $20,000; $5,000 B) $20,000; -$5,000 C) $25,000; -$5,000 D) $45,000; -$5,000 ANSWER B
Date: September 9th, 2020
How can the market demand for a product be inelastic but the demand for a particular firm is elastic? A) There is no advertising. B) There is a sufficiently large number of sellers. C) There is only one or two sellers. D) Buyers do not have complete information. ANSWER B
Date: September 9th, 2020
The model of perfect competition is valuable for A) prediction. B) comparison to other markets. C) Either A or B D) None of the above. ANSWER C
Date: September 9th, 2020
A market is perfectly competitive even if firms have the ability to set their own price as long as the price difference reflects differences in the product. Indicate whether the statement is true or false ANSWER False. If the market is perfectly competitive, there are no differences in the product.
Date: September 9th, 2020
Many auction sites, such as eBay, provide a reputation score by which previous customers can rate a seller. Which of the following characteristics of a competitive market is this policy trying to emulate? A) There is freedom of entry and exit. B) There are very low transaction costs. C) There are only one or two […]
Date: September 9th, 2020
A monopoly does not have a supply curve. Indicate whether the statement is true or false ANSWER True . A supply curve shows how much quantity a firm wishes to sell at any given price. First, the monopoly does not take price as given. The monopoly determines price based on the shape and position […]
Date: September 9th, 2020
