Under which pair of conditions is a factor of production least likely to earn economic rent?
Supply curve Demand curve
A)Perfectly inelastic Perfectly elastic
B)Upward sloping Downward sloping
C)Perfectly elastic Downward sloping
答案： C
If the supply of a productive resource is perfectly elastic, it earns no economic rent. Elasticity of demand is not directly related to economic rent.
Marginal revenue is equal to price for firms operating in which market structure(s)?
A)Both perfect competition and imperfect competition.
B)Neither perfect competition nor imperfect competition.
C)Perfect competition only.
答案： C
In perfectly competitive markets, firms can sell the entire quantity they produce at the market price, so marginal revenue is equal to the market price. In imperfect competition, firms are price searchers in that they can increase their quantity sold only by decreasing the selling price per unit. As a result, marginal revenue is less than price.
A firm realizes that it is producing more than the profit maximizing level of output and makes a short-run decision to decrease its output. Which of the firm cost measures is least likely to decrease as a result?
答案： B
A short-run decrease in output will cause a firm average fixed costs to increase because its fixed costs are spread over a smaller number of units. In terms of cost curves, average fixed cost never slopes upward, so a decrease in output never reduces average fixed costs. The average variable cost, average total cost, and marginal cost curves all have upward sloping components along which a lower level of output would result in a lower cost.
Which of the following most accurately describes the relationship between the average total cost (ATC) curve and the average variable cost (AVC) curve? The vertical distance between the ATC and AVC curves:
A)increases as output increases.
B)decreases as output increases.
C)increases and then decreases as output increases.
答案： B
The vertical distance between the ATC curve and AVC cost curve is average fixed cost, which decreases as output increases because more output is averaged over the same cost.
