Which of the following statements is true in the short run?

Large industries that employ most of the available resources tend to have constant costs in the lon Show more Large industries that employ most of the available resources tend to have constant costs in the long run. O True O False Figure 9.5 Figure 9.5 shows the short run and long run effects of an increase in demand of an industry. The market is in equilibrium at point A where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right Which of the following statements is true in the short run? A. Each existing firm produces two more units per hour compared to its initial profit maximizing output level at point A. B. Each existing firm maximizes its profit by producing the output where marginal cost equals $12. c. The market price rises to $12 which is greater than the average total cost. D. all of the above A firms short run supply curve is its marginal cost curve above its average variable cost cun O True O False Suppose your firm is operating in a perfectly competitive market and that the minimum average variable cost of producing your good is $13. If the price of the good is $15 your firm should A. supply the amount of the good where the marginal cost of production is equal to $15. B. not produce anything since the price is above the minimum of average variable cost. c. not consider price when determining the amount to sell. D. not do any of the above. MC Figure 9.2 Figure 9.2 shows the cost structure of a firm in a perfectly competitive market. Suppose the current market price is $10 and the firm produces the profit maximizing output level. If the firms total fixed cost increases due to a new government regulation the short run response of the firm should be to: Note: since the question does not restrict the firms response to the short run we cant rule out that the rise in fixed cost will push the firm below the breakeven point and that the firm will exit the industry in the long run thus decreasing its current output level. A. produce its current output level. B. decrease its current output level. c. increase its current output level. D. There is no sufficient information. If a firm is a price Taker the demand curve faced by the firm is: A. horizontal. B. downward sloping. c. upward sloping. D. vertical. Information goods such as a music video have an L shaped average cost curve. O True O False Lower input prices in large firms might lead to: A. upward sloping marginal cost curves. B. upward sloping short run average cost curves. c. upward sloping long run average cost curves. D. downward sloping long run average cost curves. Marginal product is defined as the change in resulting from a one unit increase in A. output; total product B. total product; input c. total product; output D. total cost; output Economic profit is total revenue less economic costs. O True O False Show less

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