Review Set 5

Review Set 5 - Review Set 4: Economics 100 D: Introduction...

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Review Set 4: Economics 100 D: Introduction to Economic Principles Spring 2007 Franklin and Marshall College Department of Economics Dr. Utteeyo Dasgupta Office: Stager332 Email: utteeyo.dasgupta@fandm.edu Contact Hours: Web: http:edisk.fandm.edu/utteeyo.dasgupta T 10:30 -11:30, 2:00 – 3:00 R 10:30 -11:30, 2:00 – 3:00 and by appointment True or False: 1. A perfectly competitive market is characterized by a large number of buyers and sellers. 2. It is relatively easy for firms to enter and exit a perfectly competitive market. 3. The demand curve faced by a perfectly competitive firm is vertical. 4. A perfectly competitive firm faces a perfectly elastic demand curve. 5. In a perfectly competitive market, marginal revenue is the same as the market price. 6. Whenever marginal revenue is greater than marginal cost, a profit-maximizing firm should reduce its output. 7. If price is less than the average variable cost, firms that seek to maximize profit should shut down. 8. Firms should shut down in the short run whenever price is less than the average total cost. 9. Control of a scarce resource or input can serve as an entry barrier. 10. The U. S. Postal Service historically has had a monopoly over the market for the delivery of first- class letters in the United States. 11. A monopoly firm can sell as much output as it wants at whatever price it sets. 12.
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Review Set 5 - Review Set 4: Economics 100 D: Introduction...

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