1. Each point on an LAC for an individual firm a. Is NOT on the expansion path i
ID: 1121808 • Letter: 1
Question
1. Each point on an LAC for an individual firm
a. Is NOT on the expansion path in an isoquant analysis
b. Is the minimum point on a firm’s short – run average cost curve
c. Is associated with a tangency in the isoquant analysis
d. Reflects the Law of Diminishing Marginal Returns
2. Which of the following is true of a firm in a monopoly market?
a. The price charged by the monopolist is less than the marginal cost of production.
b. The equilibrium output in a monopoly market is larger compared to a competitive market.
c. There is a deadweight loss in a monopoly market.
d. In a monopoly market long-run economic profits are zero.
3. The deadweight loss of a monopoly arises from:
a. the loss of consumer surplus being greater than the gain in firm profits.
b. the transfer of firm profits to consumers.
c. the loss in firm profits being greater than the gain in consumer surplus.
d. the combined loss of consumer and firm profits.
4. Which of the following is a condition for long-run equilibrium in a competitive industry?
a. Each firm in the industry is earning zero economic profit.
b. The inputs employed in the industry earn less than they would had they been used elsewhere.
c. Each firm in the industry will produce that level of output at which marginal cost is the lowest.
d. The number of new entrants into the industry is positive.
5. After Uber, which of the following would positively affect the price of a medallion given sufficient time for the industry to adjust?
Select one:
a. Increase in population
b. Increase in the number of conventions
c. Economic growth
d. None of the above since each of these would shift the demand for passenger service to the right, increase economic profits of current firms which, in turn, would induce entry from firms like Uber even with the licensing restrictions on traditional cabs
Explanation / Answer
1.c. Long run average cost curve is U shaped and made from tangent Points of short run average cost curves. IsoCost curves are tangent to isoquant curves.
2. C. There is dead weight loss under monopoly. A monopolist is a single seller who sells a unique product with no close substitutes available.
3. A. Loss in consumer surplus is more than gain in producer surplus
4. A. Each firm earns zero profit in Long run so that no firms enter or exit and industry is in equilibrium.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.