Exam 9: Aggregate Demand

In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: In Figure 23.3, at a price of p₃ in the long run

Refer to Figure 23.6 for a perfectly competitive firm. If this firm produces the level of output corresponding to point B in the short run, it will earn

In a perfectly competitive market, firms will earn zero economic profits in the long run.

In the short run, a perfectly competitive firm's production decision aims to maximize profits at the production rate where P = MR = MC.

Refer to Figure 23.1 for a perfectly competitive firm. In the long run, this firm would stay in this market only if the market price was equal to or higher than

The entry of firms into a market

If someone invents a better way to produce frozen pizzas, then

Refer to Figure 23.1. If the market price equaled $10, in the short run this firm should

The equilibrium price of a good or service in a competitive market is

Refer to Figure 23.2 for a perfectly competitive firm. Given the current market price of $100, we expect to see

In a perfectly competitive market economy, business failures can benefit society by causing

When entrepreneurs decide to build a plant, they are making a production decision.

When economic losses exist in the cereal market, for example, this is an indication that

Refer to Figure 23.5 for a perfectly competitive firm. Which of the following is not true for this firm at a price of $200?

If price is above the long-run competitive equilibrium level,

In a competitive market, economic profits will

Which of the following is not a barrier to entry?

Perfect information is a necessary condition of perfect competition.

Marginal cost pricing means that a firm

If economic profits are earned in a competitive market, then over time