11)
A constant-cost, perfectly competitive industry experiences a permanent increase in demand. In adjusting to this change, what will happen to the price of the product?
It will increase in the short-run and then decrease in the long-run, but end up above its original level in the long-run.
It will increase in the short-run and then increase further in the long-run.
It will increase in the short-run and then decrease back to its original level in the long-run.
It will increase in the short-run and then decrease below its original level in the long-run.
It will decrease in the short-run but return to its original level in the long-run.
12)
Assume that a perfectly competitive firm owns or rents a higher-quality resource that results in lower average total costs and higher economic profits in the short run. What will happen in the long-run?
The price of the higher-quality resource will be bid upward resulting in economic rents and equalizing costs across firms.
New firms will enter and compete with any excess profits away.
None of the other answers is correct.
The government will tax away any excess profits.
The firm with the higher-quality resource will earn positive economic profits in the long run.
13)
Which of the following are characteristics of long-run equilibrium?
No firm has an incentive to change its level of output.
No firm has an incentive to change its plant size.
Economic profit is zero
All of the above
None of the above
14)
Which of the following statements is consistent with the textbookâs analysis of perfect competition?
Although individual perfectly competitive firms wonât pay to advertise, the industry as a whole may well advertise.
Higher costs for one firm in the industry will result in that firm charging a higher price than the other firms in the industry.
If all the firms in an industry charge an identical price for their products, this is clear evidence of collusive behavior.
All of the above
None of the above
15)
The assumptions that define the market structure known as monopoly include which of the following?
High barriers to entry.
There is one seller.
There are no close substitutes available.
All of the above
None of the above
11)
A constant-cost, perfectly competitive industry experiences a permanent increase in demand. In adjusting to this change, what will happen to the price of the product?
|
It will increase in the short-run and then decrease in the long-run, but end up above its original level in the long-run. |
|
|
It will increase in the short-run and then increase further in the long-run. |
|
|
It will increase in the short-run and then decrease back to its original level in the long-run. |
|
|
It will increase in the short-run and then decrease below its original level in the long-run. |
|
|
It will decrease in the short-run but return to its original level in the long-run. |
12)
Assume that a perfectly competitive firm owns or rents a higher-quality resource that results in lower average total costs and higher economic profits in the short run. What will happen in the long-run?
|
The price of the higher-quality resource will be bid upward resulting in economic rents and equalizing costs across firms. |
|
|
New firms will enter and compete with any excess profits away. |
|
|
None of the other answers is correct. |
|
|
The government will tax away any excess profits. |
|
|
The firm with the higher-quality resource will earn positive economic profits in the long run. |
13)
Which of the following are characteristics of long-run equilibrium?
|
No firm has an incentive to change its level of output. |
|
|
No firm has an incentive to change its plant size. |
|
|
Economic profit is zero |
|
|
All of the above |
|
|
None of the above |
14)
Which of the following statements is consistent with the textbookâs analysis of perfect competition?
|
Although individual perfectly competitive firms wonât pay to advertise, the industry as a whole may well advertise. |
|
|
Higher costs for one firm in the industry will result in that firm charging a higher price than the other firms in the industry. |
|
|
If all the firms in an industry charge an identical price for their products, this is clear evidence of collusive behavior. |
|
|
All of the above |
|
|
None of the above |
15)
The assumptions that define the market structure known as monopoly include which of the following?
|
High barriers to entry. |
|
|
There is one seller. |
|
|
There are no close substitutes available. |
|
|
All of the above |
|
|
None of the above |
