1. Price elasticity of demand is the ratio of the percentage change in price of one...
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1. Price elasticity of demand is the ratio of the percentage change in price of one good to the percentage change in quantity demanded of another good. a. True b. False 2. If marginal cost is rising, average variable cost must also be rising. a. True b. False The single-price monopolist produces the quantity of output at which marginal cost equals marginal revenue and charges a price that is greater than marginal revenue. 3. a. True b. False If the firm is producing a quantity of output for which MC > MR, then the firm should increase production to increase its profits. 4. a. True b. False Cross elasticity of demand measures consumer responsiveness to a change in the price of one good, in terms of the quantity demanded of some other good. 5. a. True b. False 6. Accounting profit is always greater than or equal to economic profit. a. True b. False An example of an implicit cost is the foregone income that a business owner-manager could have earned working for someone else. 7. a. True b. False Monopolists are guaranteed to earn a positive economic profit because they are the only seller in their industry. 8. a. True 1. Price elasticity of demand is the ratio of the percentage change in price of one good to the percentage change in quantity demanded of another good. a. True b. False 2. If marginal cost is rising, average variable cost must also be rising. a. True b. False The single-price monopolist produces the quantity of output at which marginal cost equals marginal revenue and charges a price that is greater than marginal revenue. 3. a. True b. False If the firm is producing a quantity of output for which MC > MR, then the firm should increase production to increase its profits. 4. a. True b. False Cross elasticity of demand measures consumer responsiveness to a change in the price of one good, in terms of the quantity demanded of some other good. 5. a. True b. False 6. Accounting profit is always greater than or equal to economic profit. a. True b. False An example of an implicit cost is the foregone income that a business owner-manager could have earned working for someone else. 7. a. True b. False Monopolists are guaranteed to earn a positive economic profit because they are the only seller in their industry. 8. a. True
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