The "Bubbles, Bubbles" soap bubble firm's price and cost data are: price = $10; MR = $10; MC = $10; ATC = $10 . This firm is
a. making an economic profit of $10
b. in monopolistic competition and in short-run equilibrium
c. about to shut down because economic profit is zero
d. a monopolist with a relatively inelastic demand
e. in a perfectly competitive market and in long-run equilibrium
E
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A recent medical study reports new benefits of cycling. Simultaneously, the price of the parts needed to make bikes falls. The demand curve would _________ and the supply curve would__________
a. Shift to the right, shift to the left b. shift to the left, shift to the right c. shift to the left, shift to the left d. shift to the right, shift to the right
During a war, governments will sometimes draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?
a. the value of the civilian goods no longer produced by the new soldiers b. the cost of feeding and clothing the new soldiers c. the dollar cost of the payroll d. the higher prices of civilian goods due to wartime shortages e. the cost of transporting the soldiers to combat