7 - Sample Questions: Chapter 7 Drawing Graphs Suppose...

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Sample Questions: Chapter 7 Drawing Graphs Suppose firms initially are earning zero economic profit in the wheat market. Show what happens to the firm’s profit in each of the following cases in the short run and in the long run: a. A rightward shift in the demand for wheat b. A leftward shift in the demand for wheat c. Explain the long-run case in (a) and (b) with the help of what you know about economic profit and firm’s entry and exit to the industry in response to the presence or absence of it. d. In case of (b), when will the firm leave the industry even in the short run? (Hint: Chapter 6, Average Variable Cost) Multiple Choice Questions: 1. If total revenue covers explicit costs but not opportunity costs, then: A) both economic profit and accounting profit are positive. B) economic profit is positive, but accounting profit is negative. C) accounting profit is positive, but economic profit is negative. D)
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This note was uploaded on 11/03/2009 for the course ECON 210 taught by Professor James during the Spring '09 term at The University of British Columbia.

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7 - Sample Questions: Chapter 7 Drawing Graphs Suppose...

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