Answer the following statement(s) true (T) or false (F)
1. A competitive firm will exit an industry in the long run if the market price falls below the firm's break-even price.
2. For a competitive firm with a downward sloping marginal cost curve, the supply curve and the marginal cost curve look exactly the same
3. There is no reason for a competitive firm to stay in business if it is making zero economic profit.
4. A decrease in firms’ variable costs will cause the output of the market to decrease.
5. A technological advance that reduces firms’ variable costs will lead to higher profits in the long run of a perfectly competitive industry.
1. True
2. False
3. False
4. False
5. False
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The proliferation of new products that we are used to today has been occurring since the advent of the Industrial Revolution
a. True b. False Indicate whether the statement is true or false
In developing prospect theory, which of the following did behavioral economists not discover about people's reaction to goods and bads?
A. People feel equivalent losses and gains in equal measure, supporting the assumption that consumers behave rationally. B. People are generally loss averse, feeling losses more intensely than gains. C. People judge good and bad outcomes relative to the status quo. D. People experience both diminishing marginal utility from gains and diminishing marginal disutility from losses.