QUESTION 46 When demand increases in a perfectly competitive market, in the shor

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QUESTION 46 When demand increases in a perfectly competitive market, in the short run and in the long run prices increase; supply increases prices increase; prices stay permanently higher quantity supplied increases; pr quantity supplied decreases; prices decrease ces increase QUESTION 47 When economic profits are zero, accounting profits are most likely: All of these are likely. QUESTION 48 When government owns a natural monopoly, it can: create the provide an efficient outcome. sustain losses. rid the industry of deadweight loss. QUESTION 49 When some firms leave a perfectly competitive market, the price: falls, and profits of those left rise. falls, and profits of those left fall. increases, and profits of those left rise. increases, and profits of those left fall. QUESTION 50 When the monopolist decides to supply a given amount to the market, it will: set competition. the price higher than it would be in perfect set the price higher than what demanders are willing to pay for that amount. only sell that amount if it charges what the demanders are willing to pay for that amount. set the price lower than the demand curve to create a perceived shortage.

Explanation / Answer

46) a) price increases, supply increases. This is because in perfect competition when market demand increases market quantity increases along with the market price.

47) a) Positive because accounting profit is the difference between total revenue cost and explicit costs. Also, it must be higher than the economic profit which gives it the only possibility of being positive.

48) c) Sustain losses, because it has the funding to sustain the loses it has.

49) c) Increases and profits of those left rises.

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