Control of resources, problems raising capital, and economies of scale are all e

Question

Control of resources, problems raising capital, and economies of scale are all examples of

Legislative efforts to curtail the adverse consequences of oligopolistic cooperation began with the ________.

Use the following scenario to answer the following questions:

Carmela’s Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Carmela’s Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs.

Holding all else constant, the price of churros in this market will

decrease in the short run.

The perfectly competitive firm’s short-run supply curve is the

Explanation / Answer

(1) Option (c)

All the mentioned factors act as effective (natural) barriers to entry in a market.

(2) Option (a)

Sherman Act was the first act at curbing increasing market power and it was passed in 1890.

(3) Option (c)

Current economic profit = Revenue - Explicit cost - Implicit cost = $(40,000 - 15,000 - 25,000) = 0

Since economic profit is zero, this is a long run equilibrium with no entry and exit, leading to zero price change.

(4) Option (c)

Firm's short run supply curve is the portion of its MC curve lying above its AVC curve.

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