In a Competitive Industry Buffeted by Demand and Supply Shocks,prices

question 73

Multiple Choice

In a competitive industry buffeted by demand and supply shocks,prices increase and decrease,but economic profits tend to revert to zero.Hence,profits are exhibiting

• A)​Above-average return
• B)Positive earnings
• C)Mean reversion
• D)​None of the above

Analyze the effects of scaling inputs on output and cost in the context of economies and diseconomies of scale.

Interpret diagrams related to economies and diseconomies of scale, minimum efficient scale, and constant returns to scale.

Distinguish between the phases of economies of scale, constant returns to scale, and diseconomies of scale in the long-run.

Estimate the impact of input adjustment on long-run average total cost within different scales of production.

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Definitions:

Fair Market Value

The price at which an asset would be bought or sold in an open market.

Tax Consequences

The financial effects of transactions on tax liabilities, including how investments, income, or deductions affect taxes owed.

Basis

The initial value of an asset for tax purposes, usually the purchase price, used to calculate gains or losses when the asset is sold.

Recognized Gain

The profit realized from the sale or exchange of an asset over its adjusted basis.