Which of the following distinguishes the short run from the long run in pure competition?
A. Firms can enter and exit the market in the long run but not in the short run.
B. Firms attempt to maximize profits in the long run but not in the short run.
C. Firms use the MR = MC rule to maximize profits in the short run but not in the long run.
D. The quantity of labor hired can vary in the long run but not in the short run.
Answer: A
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A consumer is maximizing utility when
A) the slope of the budget constraint has reached -1. B) diminishing marginal utility has set in. C) the slope of the budget constraint equals the marginal rate of substitution. D) the consumer has spent all of his income.
An improvement in production technology will
A. shift the demand curve to the left. B. shift the supply curve to the left. C. shift the supply curve to the right. D. increase equilibrium price.