Question

1. absolute advantage is based on opportunity cost.

2. a perfectly competitive firm has a horizontal supply curve in the short run.

3. if both supply and demand increase, the. the change in equilibrium quantity is indeterminate.

4. The slope of the demand curve for a normal good must be positive.

5. implicit cost involves a direct casg payment for the use of a resource.

Answer 1

1)

False

Absolute advantage in based upon productivity.

2)

False

Perfectly competitive firm's marginal cost represents firm's supply curve. It may and may not be constant.  

3)

False

If demand increases (while supply is unchanged), equilibrium quantity will increase.

If supply increases (while demand is unchanged), equilibrium quantity will increase.

So, we can say that equilibrium quantity will increase as a result of increase in demand and supply.

4)

False

Demand curve has a negative slope for normal good.

5)

False

Implicit costs are opportunity costs. No direct cash payment is made for these costs.