Which of the following is true? a)If a MC is above ATC, ATC must be increasing.
ID: 1095944 • Letter: W
Question
Which of the following is true?
a)If a MC is above ATC, ATC must be increasing.
b The MC curve intersect AFC at its minimum point.
c) If MC is below AVC, AVC must be increasing.
d)None of the above.
A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate output for which
a) The long-run marginal cost curve crosses the long-run average fixed cost curve at the rate of output.
b) Long-run average total cost is lowest at the rate of output.
c) The short-run marginal cost curve crosses the short-run average total cost curve at that rate of output.
d) Total fixed cost are minimized at that rate of output.
To deter entry, firms in the industry must signal to potential entrants that the price after entry would be
a) Below the competitive price
b) Above the kink in a kinked demand curve
c) Unchanged
d) Below the price the entrant would require to earn profit.
The price elasticity of demand for a good produced by a monopolist
a) Does not equal zero because every good has at least one good substitute for it.
b) Does not equal zero because there will always be some substitutes, however imperfect they may be.
c) Equal zero as long as the good has no close substitutes
d) Is always inelastic since the demand curve slopes down.
Explanation / Answer
1. a)If a MC is above ATC, ATC must be increasing
2. b) Long-run average total cost is lowest at the rate of output.
3. d) Below the price the entrant would require to earn profit.
4. d) Is always inelastic since the demand curve slopes down.
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