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Posted: **Thu May 19, 2022 7:34 am**

: 8 Which Of The Following Statements Is True 3 Marks A If A Firm S Production Possibility Frontier Is Concave Then 1 (39.68 KiB) Viewed 56 times

: 8 Which Of The Following Statements Is True 3 Marks A If A Firm S Production Possibility Frontier Is Concave Then 2 (54.25 KiB) Viewed 56 times

: 8 Which Of The Following Statements Is True 3 Marks A If A Firm S Production Possibility Frontier Is Concave Then 3 (27.76 KiB) Viewed 56 times

8. Which of the following statements is true? (3 marks) (a) If a firm's production possibility frontier is concave, then it must face decreasing opportunity costs and increasing returns. (b) If a firm's production possibility frontier is convex, then it must face decreasing opportunity costs and decreasing returns. (c) If a firm's production possibility frontier is concave, then it must face increasing opportunity costs and decreasing returns. (d) If a firm's production possibility frontier is linear, then it must face increasing opportunity costs and constant returns.
9. Consider a perfectly competitive firm that is in the long run equilibrium. There is now a fall in market demand. This will cause: (3 marks) (a) The market price to rise, which will lead to firms making supernormal profits in the short run. New firms will enter the industry, which will take customers away from the established firms and this will push the price down until firms make only normal profits in the long run. (b) The market price to fall, which will lead to firms making losses in the long run. Some firms will exit the industry, which will push the price further down until all firms make only normal profits in the short run. (c) The market price to rise, which will lead to firms making supernormal profits in the short run. New firms will enter the industry, which will push the price down until all firms make only normal profits. (d) The market price to fall, which will lead to firms making losses in the short run. Firms will exit the industry, which will push up the price until the remaining firms make normal profits.
10. Which of the following is NOT an outcome in the long run for a monopolist? (3 marks) (a) The firm will produce at both an allocatively and a productively efficient point. (b) The firm will produce on the elastic portion of its demand curve. (c) The firm can make supernormal profits in the long run. (d) The firm will be unable to invest in research and development and product innovation due to its lack of profits.