Question :
31) A permanent decrease in demand definitely
A) shifts a firm’s : 1226178
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) 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.
39) If perfectly firms are making an economic profit, the economic profit
A) attracts entry by more firms, which lowers the price.
B) can be earned both in the short run and the long run.
C) is less than the normal profit.
D) leads to a decrease in market demand.
E) generally leads to firms exiting as they seek higher profit in other markets.
40) If perfectly firms are making an economic profit, then
A) the market is in its long-run equilibrium.
B) new firms enter the market and the equilibrium profit of the firms already in the market decreases.
C) new firms enter the market and the equilibrium profit of the firms already in the market increases.
D) firms exit the market and the economic profit of the surviving firms in the market decreases.
E) firms exit the market and the economic profit of the surviving firms in the market increases.
41) As a result of firms leaving the perfectly competitive frozen yogurt market in the early 2000s, the market
A) supply curve shifted leftward.
B) supply curve did not change.
C) demand curve shifted rightward.
D) supply curve shifted rightward.
E) demand curve shifted leftward.
42) Firms exit a competitive market when they incur an economic loss. In the long run, this exit means that the economic losses of the surviving firms
A) increase.
B) decrease until they equal zero.
C) decrease until economic profits are earned.
D) do not change.
E) might change but more information is needed about what happens to the price of the good as the firms exit.
43) If firms in a perfectly competitive market are incurring economic losses, then as time passes firms ________ and the market ________.
A) enter; demand curve shifts leftward
B) enter; supply curve shifts rightward
C) exit; demand curve shifts leftward
D) exit; supply curve shifts rightward
E) exit; supply curve shifts leftward
44) In the long run, a firm in a perfectly competitive market will
A) make zero economic profit, so that its owners earn a normal profit.
B) make zero normal profit but its owners will make an economic profit.
C) remove all competitors and become a monopolistically competitive firm.
D) incur an economic normal loss but not earn a positive economic profit.
E) remove all competitors and become a monopoly.
45) Technological change brings a ________ to firms that adopt the new technology.
A) permanent economic profit
B) temporary economic profit
C) permanent economic loss
D) temporary economic loss
E) temporary normal profit
