The short-run supply curve of a perfectly competitive firm
A. intersects the minimum point of its short-run average total cost curve but not its short-run average variable cost curve.
B. intersects the minimum point of its short-run average variable cost curve but not its short-run average total cost curve.
C. intersects the minimum point of both its short-run average variable cost and its short-run average total cost curves.
D. intersects the minimum point of its short-run average total cost curve and may or may not intersect the minimum point of its short-run average variable cost curve.
Answer: C
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A monopoly creates a deadweight loss because the monopoly produces less than the efficient quantity
Indicate whether the statement is true or false
If the marginal physical product (MPP) of the last dollar spent on labor is only half as large as the MPP from the last dollar spent on capital, this firm should
A) increase its use of labor and employ less capital. B) employ more capital. C) increase its use of both labor and capital. D) maintain its current factor utilization pattern.