True/False
Indicate whether the sentence or statement is true or false.
____ 1. The average fixed cost curve increases as output increases over a relevant range of production.
____ 2. Average revenue is slightly higher than price.
____ 3. Marginal cost curves and average cost curves are both purely upward sloping.
____ 4. A firm that sells at a price below average cost is not making a normal profit.
____ 5. In the short run, it is possible for a perfectly competitive firm to make economic profits or economic losses.
____ 6. If a firm sells its output at a price greater than AC, it will earn economic profit.
____ 7. Zero profit in the economic sense means that firms are earning a normal rate of return.
____ 8. In a free market (laissez-faire) system, the price mechanism dictates the production planning (how to produce) decisions.
____ 9. Free markets produce relatively high levels of efficiency but low rates of growth.
____ 10. A natural monopoly occurs when a single firm can produce the entire output of the market at a lower average cost than could many firms.
True/False
Indicate whether the sentence or statement is true or false.
____ 1. The average fixed cost curve increases as output increases over a relevant range of production.
____ 2. Average revenue is slightly higher than price.
____ 3. Marginal cost curves and average cost curves are both purely upward sloping.
____ 4. A firm that sells at a price below average cost is not making a normal profit.
____ 5. In the short run, it is possible for a perfectly competitive firm to make economic profits or economic losses.
____ 6. If a firm sells its output at a price greater than AC, it will earn economic profit.
____ 7. Zero profit in the economic sense means that firms are earning a normal rate of return.
____ 8. In a free market (laissez-faire) system, the price mechanism dictates the production planning (how to produce) decisions.
____ 9. Free markets produce relatively high levels of efficiency but low rates of growth.
____ 10. A natural monopoly occurs when a single firm can produce the entire output of the market at a lower average cost than could many firms.
