ECON-102-Fall-2012-Exam-3-Version_A_and_C

1 b 9 c 19 d 29 29 a monopolists marginal

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Unformatted text preview: canes). Based on the information given, we can conclude that in the long run we will observe: a. firms leaving the industry. b. firms entering the industry. c. some firms entering and some firms leaving. d. neither entry nor exit from the industry. 23. Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long- run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the short run, we expect that the market price will ________ and the output of a typical firm will ________. a. rise; rise b. rise; fall c. fall; rise d. fall; fall 24. Lilly is the price- taking owner of an apple orchard. Currently the price of apples is low enough that Lilly is earning negative economic profits. In the long run, Lilly should expect: a. lower apple prices due to entry of new firms. b. higher apple prices due to exit of existing firms. c. lower apple prices due to exit of existing firms. d. higher apple prices due to entry of new firms. 25. Ashley determines that her marginal cost of producing one more unit of Good X is equal to $10. A consumer offers her $12 if she sells one more unit of Good X to her. To maximize profits Ashley will: a. not sell the additi...
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