47222-econ

Category: Economics > Microeconomics Subject: Production and Cost in the Short Run Details: 1) At a management luncheon, two managers were overheard arguing about the following statement,"a manager should never hire another worker if the new person causes diminishing returns". Is this statement Correct? If so why? If not explain why not? In detail. 2) Explain why it would cost Pete Sampras or Venus Williams more to leave the pro tennis tour and open a tennis shop than it would cost a coach of a tennis team to do so.

Profits in competitive firms

In a short-run situation in which quantity demanded equals quantity supplied in a competitive industry, with price greater than the average cost of the typical firm, A) total profits across the market are negative and some firms will be forced to leave. B) The profit of the typical firm must nonetheless be zero so that firms neither enter nor leave the market. C) total profits across the market are positive and some new firms will be attracted to the market. D) one firm will grow to dominate the market and set both price and quantity. E) none of the above

Price Lowering in Perfect Competition

Which of the following would occur if a single farm in a perfect competition lowered its price below the long-run equilibrium market price? A) all other farms would lower prices too B) it would not be maximizing profit C) It would get a larger share of the market, and this would be profitable for it. D) Other farms would be driven out of the industry. E) other farms would enter the industry. I chose D for this answer but then I considered A. What do you think and why? Thanks

28- What eliminates perfect competition in a market?

Which of the following eliminates the possibility of perfect competition in a market? a) the industry faces a downward sloping demand curve b) individual firms face downward sloping demand curves c) firms face decreasing returns to scale d) firms display constant returns to scale E) the market lacks product differentiation I think A but am not sure.

29 - Marginal Revenue - Marginal Cost

If a firm finds out that its MR is greater than its MC, it should: a) increase production and sales B0 decrease production and sales c) encourage the entry of other firms into the market d) keep raising its selling price until MR =MC. E) change nothing because profits are maximized.