question
A firm in a competitive industry takes account of the fact that the demand curve it confronts
has a significant negative slope.
has a significant negative slope.
answer
False
question
In a perfectly competitive industry, the demand curve for the total output of the industry
may be downward sloping.
may be downward sloping.
answer
True
question
Price equals marginal cost is a sufficient condition for prot maximization.
answer
False
question
A rm faces competitive markets both for its inputs and its outputs. If its long run supply
curve is q = 3p; then it can not have constant returns to scale.
curve is q = 3p; then it can not have constant returns to scale.
answer
True
question
A rm with the cost function c(y) = 20y^2 + 500 has a U-shaped cost curve.
answer
True
question
Mr. O. Carr has the cost function c(y) = y^2 + 144 if his output, y; is positive and c(0) = 0.
If the price of output is 30, Mr. Carr' s profit-maximizing output is zero.
If the price of output is 30, Mr. Carr' s profit-maximizing output is zero.
answer
False
question
Mr. O. Carr has the cost function c(y) = y^2 + 36 if his output, y; is positive and c(0) = 0. If
the price of output is 18, Mr. Carr' s prot-maximizing output is zero.
the price of output is 18, Mr. Carr' s prot-maximizing output is zero.
answer
False
question
A rm produces one output, using one input, with the production function f (x)=2x^1/3
where x is the amount of input. The cost function for this rm is proportional to the price of the
input times the cube of the amount of output.
where x is the amount of input. The cost function for this rm is proportional to the price of the
input times the cube of the amount of output.
answer
True
question
A competitive rm has a continuous marginal cost curve. It finds that as output increases,
its marginal cost curve first rises, then falls, then rises again. If it wants to maximize prots, the
rm should never produce at a positive output where price equals marginal cost and marginal cost
decreases as output increases.
its marginal cost curve first rises, then falls, then rises again. If it wants to maximize prots, the
rm should never produce at a positive output where price equals marginal cost and marginal cost
decreases as output increases.
answer
True
question
Two firms have the same technology and must pay the same wages for labor. They have
identical factories, but Firm 1 paid a higher price for its factory than did Firm 2. If they are both
profit maximizers and have upward sloping marginal cost curves, then we would expect Firm 1 to
have a higher output than Firm 2.
identical factories, but Firm 1 paid a higher price for its factory than did Firm 2. If they are both
profit maximizers and have upward sloping marginal cost curves, then we would expect Firm 1 to
have a higher output than Firm 2.
answer
False
question
The area under the marginal cost curve measures total variable costs.
answer
True
question
Average fixed costs never increase with output.
answer
True
question
The change in producer's surplus when the market price changes from p1 to p2 is half of
the area to the left of the marginal cost curve between p1 and p2.
the area to the left of the marginal cost curve between p1 and p2.
answer
False
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