Which of the following is the most reliable outcome of raising the tax rate on a particular good? The quantity of the good sold will decrease.
Under which condition would the firm be incurring a loss quizlet?
Losses occur when revenues do not cover total costs. If revenues are greater than variable costs, but not total costs, the firm is better off producing in the short run rather than shutting down, even though it is incurring a loss.
When excise tax is imposed on buyers this will cause the <UNK> curve to shift?
When an ‘excise tax’ is imposed on buyers, this will cause the demand curve to shift. Explanation: When the ‘excise tax’ is imposed on the buyers then the ‘demand curve’ shifts down according to the ‘amount of the tax’.
What are two reasons a business may exit from the market select two correct answers?
When prices and profits rise, a firm has the incentive to enter the market if there are no barriers to entry. What are two reasons a business may exit from the market? A business might find itself in need of exiting a market due to domestic competition, unproductive workers, or even poor management.
Which of the following must be true if a firm is experiencing economies of scale?
Which of the following must be true if a firm is experiencing economies of scale? Long-run average total cost decreases as the firm’s output increases.
Who actually benefits from a subsidy to sellers?
Who actually benefits from a subsidy to sellers? The benefit is shared depending on elasticity of the supply and demand curves.
When a tax is imposed on a good for which both demand and supply are very elastic?
When a tax is imposed on a good for which both demand and supply are very elastic, sellers effectively pay the majority of the tax. buyers effectively pay the majority of the tax. the tax burden is equally divided between buyers and sellers.
How do excise taxes affect the supply curve?
The effect of the tax is to shift the supply curve, which is S without the tax, to St. The shift is an upward shift by the amount of the tax, but the upward shift is the same as a backward shift, a decrease in supply. … Thus the consumers and producers share the burden of the tax.
When new firms enter a perfectly competitive market what is the impact on prices?
The arrival of new firms in the market causes the demand curve of each individual firm to shift downward, bringing down the price, the average revenue and marginal revenue curve. In the long-run, the firm will make zero economic profit.
What happens when demand increases in a perfectly competitive market?
In perfect competition, when market demand increases, explain how the price of the good and the output and profit of each firm changes in the short run. When market demand increases, the market price of the good rises, and the market quantity increases. … The firm’s profit rises (or its economic loss decreases).
How do you know if a firm is perfectly competitive?
Firms are said to be in perfect competition when the following conditions occur: (1) many firms produce identical products; (2) many buyers are available to buy the product, and many sellers are available to sell the product; (3) sellers and buyers have all relevant information to make rational decisions about the …
Which of the following is the best example of public good?
Examples of public goods include fresh air, knowledge, lighthouses, national defense, flood control systems, and street lighting. Streetlight: A streetlight is an example of a public good. It is non-excludable and non-rival in consumption. Public goods can be pure or impure.
What happens if a firm is experiencing economies of scale?
Economies of scale are cost advantages companies experience when production becomes efficient, as costs can be spread over a larger amount of goods. A business’s size is related to whether it can achieve an economy of scale—larger companies will have more cost savings and higher production levels.
What are the conditions for allocative efficiency?
Allocative efficiency is a state of the economy in which production is aligned with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing.