Econ_ch11

Econ_ch11 - homework6-ch11 1. Refer to the graph above....

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Page 1 homework6-ch11 1. Refer to the graph above. Other things equal, an increase in the market price of this product will cause: A. an increase in total revenue and a decrease in the firm's profit-maximizing level of output. B. an increase in total revenue and an increase in the firm's profit-maximizing level of output. C. a decrease in total revenue and a decrease in the firm's profit-maximizing level of output. D. a decrease in total revenue and an increase in the firm's profit-maximizing level of output. 2. In a perfectly competitive constant-cost industry: A. factor prices do not change as industry output increases. B. factor prices rise as industry output increases. C. factor prices fall as industry output increases. D. there is no way to predict what will happen to factor prices as industry output increases. 3. Spam (junk e-mail) is a major annoyance for many people who use the internet. However, spammers sometimes have to send thousands of messages to get even one response that pays money. Given this information: A. spamming cannot be profitable because of the low numbers of buyers; it's sole purpose is to annoy others. B. spamming cannot be profitable because of the low numbers of buyers; it is fraudulently profitable. C. spamming can be profitable even with very low numbers of buyers because the marginal cost of sending spam is virtually zero. D. as many other activities on the internet, spammers are only profitable because they rely on the fees from advertising.
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4. In a perfectly competitive market, a decrease in market demand in a long-run constant-cost industry causes: A. an increase in price, quantity, and profit in the short run. B. an increase in price, quantity, and profit in the long run. C. a decrease in price, a decrease in quantity, and a decrease in profit in the short run. D. a decrease in price, a decrease in quantity, and a decrease in profit in the long run. 5. The existence of economic losses induces firms to: A. exit an industry, which shifts the market supply curve to the left and increases market price. B. enter an industry, which shifts the market supply curve to the right and decreases market price. C. enter an industry, which shifts the market supply curve to the left and decreases market price. D. exit an industry, which shifts the market supply curve to the right and decreases market price. 6. Refer to the graph above. What level of output should the perfectly competitive firm produce to maximize profits? A. 7. B. 8. C. 6. D. 4. 7. Long-run competitive equilibrium in an industry implies that no firm: A. is earning a normal profit. B. is producing at the output level where price equals long-run average total cost. C.
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This note was uploaded on 12/09/2009 for the course ECON 2030 taught by Professor Bong during the Spring '07 term at LSU.

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Econ_ch11 - homework6-ch11 1. Refer to the graph above....

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