Question :
31) A permanent decrease in demand definitely
A) shifts a firm’s : 1241205
31) A permanent decrease in demand definitely
A) shifts a firm’s average total cost curve downward.
B) creates diseconomies for individual firms.
C) lowers the market price.
D) decreases the number of firms in the industry.
E) shifts a firm’s average total cost curve upward.
32) The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a
A) lower price, economic losses by rutabaga farmers, and entry into the market.
B) lower price, economic losses by rutabaga farmers, and exit from the market.
C) higher price, economic profits for rutabaga farmers, and entry into the market.
D) higher price, economic losses by rutabaga farmers, and exit from the market.
E) lower price, economic profits for rutabaga farmers, and entry into the market.
33) Technological change
A) usually requires an investment in a new plant.
B) is implemented in the short run.
C) almost always increases the costs of production.
D) almost always increases the variable costs of production.
E) cannot help a firm to earn an economic profit in either the short run or the long run.
34) When a firm adopts new technology, generally its
A) cost curves shift upward.
B) cost curves shift downward.
C) cost curves are unaffected.
D) supply curve shifts leftward.
E) production permanently decreases.
35) In a market undergoing technological change, firms that
A) adopt the new technology temporarily incur an economic loss.
B) adopt the new technology temporarily make an economic profit.
C) do not adopt the new technology temporarily make an economic profit.
D) do not adopt the new technology increase their market share.
E) do not adopt the new technology continue to make a normal profit.
36) If the technology associated with producing fiber-optic cable continues to advance, over time the cost of producing fiber-optic cable will
A) decrease, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market.
B) decrease, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry.
C) increase, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market.
D) increase, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry.
E) decrease, firms that do not use the new technology will make an economic profit, and in the long run new firms will enter the market.
37) Technology reduces the average cost of production, so in the long run
i.perfectly competitive firms produce at a lower average cost.
ii.the market price of the good falls.
iii.firms with older plants either exit the market or adopt the new technology.
A) i only.
B) i and ii.
C) iii only.
D) i and iii.
E) i, ii, and iii.
38) Technological change allows perfectly competitive firms to ________ and leads to ________.
A) lower their costs; lower prices for consumers
B) raise their prices; higher prices for consumers
C) lower their costs; higher prices so the firms can earn economic profits in the long run
D) raise their costs; higher prices and maximum profits in the long run
E) lower their costs; deadweight loss
39) Suppose the cost of a CD is $20. As online retailers enter the market with new technology, the price of CDs ________, and traditional music stores find that ________.
A) decreases; their AVC exceeds the new lower price and they exit the industry
B) decreases; their ATC curve shifts lower and their profit increases
C) increases; they compete with online retailers at the new higher price
D) increases; their costs have risen due to the new technology
E) decreases; they compete with online retailers with higher profits
40) In the long run, new firms enter a perfectly competitive market when
A) normal profit is greater than zero.
B) economic profit is equal to zero.
C) normal profit is equal to zero.
D) economic profit is greater than zero.
E) the existing firms are weak because they are incurring economic losses.
