Question 1

When firms earn above normal rates of return

Accepted Answer

A)  they are able to raise their prices to increase their profits. 
B)  they are earning positive profits and new firms are likely to enter the industry. 
C)  they tend to leave the industry and seek profits elsewhere. 
D)  they are still breaking even economically. 
A)  they are able to raise their prices to increase their profits. 
B)  they are earning positive profits and new firms are likely to enter the industry. 
C)  they tend to leave the industry and seek profits elsewhere. 
D)  they are still breaking even economically.

Question 2

A firm can minimize its losses by shutting down when ________ are less than ________ costs.

Accepted Answer

A)  variable costs; fixed 
B)  fixed costs; variable 
C)  revenues; variable 
D)  operating profits; sunk 
A)  variable costs; fixed 
B)  fixed costs; variable 
C)  revenues; variable 
D)  operating profits; sunk

Question 3

As long as existing firms ________ in an industry, some existing firms will exit the industry, causing the industry ________ curve to shift to the left.

Accepted Answer

A)  incur economic losses; supply 
B)  break even; demand 
C)  incur economic losses; demand 
D)  break even; supply 
A)  incur economic losses; supply 
B)  break even; demand 
C)  incur economic losses; demand 
D)  break even; supply

When firms earn above normal rates of return

A firm can minimize its losses by shutting down when are less than costs.

As long as existing firms in an industry, some existing firms will exit the industry, causing the industry curve to shift to the left.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 9: Long-Run Costs and Output Decisions

When firms earn above normal rates of return

A firm can minimize its losses by shutting down when ________ are less than ________ costs.

As long as existing firms ________ in an industry, some existing firms will exit the industry, causing the industry ________ curve to shift to the left.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

A firm can minimize its losses by shutting down when are less than costs.

As long as existing firms in an industry, some existing firms will exit the industry, causing the industry curve to shift to the left.