1.The shapes of the total product and marginal product curves are related becaus
ID: 1167146 • Letter: 1
Question
1.The shapes of the total product and marginal product curves are related because
an increase in total product pulls marginal product up.
marginal product gives the slope of total product.
marginal product increases as total product increases.
the marginal product curve lies above the total product curve.
2.
Assume chiropractic care is provided by a competitive industry. A new government regulation requires each chiropractor to take a costly new exam for certification. What happens to the price of dental care?
The price of chiropractic care rises in the short run and rises further in the long run.
The regulation will cause higher prices in the short run, but it will have no long-run impact.
There is no change in the short run, but chiropractors will exit and prices will rise in the long run.
The exam is a sunk cost, so the price of chiropractic care does not change in either the short run or the long run.
3.
The marginal revenue curve of a competitive firm is
U-shaped.
a ray from the origin.
a horizontal line at the market price.
downward sloping.
4.
If a natural monopolist were to sell at the price where marginal cost equals demand, then it would be earning
zero economic profits, like a competitive firm in the long-run.
negative profits and would not be able to survive.
positive profits but not would not need to worry about government intervention to regulate it.
positive profits but would still need to worry about possible government intervention to regulate it.
an increase in total product pulls marginal product up.
marginal product gives the slope of total product.
marginal product increases as total product increases.
the marginal product curve lies above the total product curve.
Explanation / Answer
1.Marginal product is change in total product per unit change in output.MP is the slope of TP.
Answer-B
2.The certification will raise the marginal cost of the product.This will cause the price to rise in the short run.But perfectly competitive markets are always in equilibrium and earning zero profits in the long run.
Answer-B
3.For a competitive firm,the MR=D.l=P.Demand curve is perfectly elastic and thus, horizontal.
MR is horizontal line at market price
4.A natural monopolist's optimal pricing point is such that Average cost is equal to demand.If price is equal to demand then AC would not be covered and the firm will start incurring losses.It will need government intervention to survive.
Answer-B
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