Are the following statements true or false Explain why they

Are the following statements true or false? Explain why they are true or false.

1. The total cost function does not include opportunity costs. It only includes variable and fixed costs.

2. If profits are positive the profit maximizing firm will always produce where marginal revenue equals marginal cost.

3. $1 received at the end of every year forever has a present discounted value of $10 if the interest rate is 10%.

4. In the short run negative profits in a competitive industry result in each firm increasing its output level once profits have been driven up to zero after firms have left the industry.

5. Price supports have a lower deadweight loss than the equivalent price floor.

6. If a monopolist is able to set different prices based on observable characteristics of its customers the firm will set the higher price in the market where demand is more elastic.

Solution

Ans

1 True because economists include implicit costs in cost calculations

2 false. It can produce below this also

3 false. It could be greater

4 not in short run. So false

5 false

6 false. It is greater where demand is inelastic