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If a firm makes normal profit, the entrepreneur must earn a wage that a.is at least as m

 If a firm makes normal profit, the entrepreneur must earn a wage that

a.is at least as much as he can earn elsewhere

b.must be less than he can earn elsewhere

c.equals the economic profit generated by the firm

d.lowers the opportunity cost of finding alternative work

e.is enough for him to live on

23.              If a perfectly competitive firm made an economic profit in the short run, but not in the
                            long run, it must be true that

a.prices for inputs increased

b.demand declined

c.new firms entered, supply increased, and price fell

d.accounting profit exceeds economic profit

e.labor costs are increasing

24.              The perfectly competitive firm’s long-run supply curve is

a.the same as the industry’s supply curve

b.the average total cost curve

c.perfectly horizontal

d.the marginal cost curve above the ATC

e.the marginal cost curve above the AVC

25.              Many economists consider perfect competition to be the most desirable market structure
                            because they believe it generates the

a.highest average cost

b.lowest prices and output

c.greatest economic profit

d.lowest prices and greatest output

e.greatest normal profit

26.              As more firms enter a perfectly competitive industry, the industry supply curve shifts

a.to the left and price falls

b.to the right and price rises

c.to the right and price falls

d.to the left and price rises

e.in an unpredictable way

27.              A meatball sandwich vendor finds that when he charges a price of $6, he sells 100
                            meatball sandwiches. When he charges a price of $4, he sells 200 meatball sandwiches.
                            The marginal revenue for each of the additional 100 meatball sandwiches he sells is

a.$6

b.$4

c.$3

d.$2

e.$1

28.              The reason why firms in perfect competition end up with no economic profit in the long
                            run is that

a.they do not have the knowledge to run the firm correctly

b.in the long run, firms lose competitiveness

c.in the long run, costs rise to equal prices

d.if they make an economic profit, new firms will enter the industry, driving the price
down, and this continues until economic profit is zero

e.in the long run, the losses of firms who leave the industry equals the economic profit
of those who remain

29.              Schumpeter’s hypothesis states that

a.monopolists are always trying to raise prices

b.competition does not always generate the lowest prices

c.when government fosters competition, prices fall

d.price-takers create the highest prices

e.efficiency is highest under conditions of perfect competition

30.              A monopolist’s goal is to maximize

a.costs

b.sales

c.profit

d.market power

e.price

Dec 09 2019 Read more Less More

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