Suppose the government reduces a commercial registration fee for all firms in a competitive industry.  Evaluate whether the following statements are TRUE or FALSE. 

Statement 1: A typical firm of the industry will raise its output in the short run. 

Statement 2: A typical firm of the industry will see an increase in producer surplus in the short run.

The following shows the cost schedules of a competitive firm in a constant-cost industry and the prevailing price in the short run.

We expect, in the long run,

(I) the marginal cost curve to shift down.

(II) the average cost curve to shift up.

(III) the prevailing price to decrease.

(IV) the production of individual firm to increase.

The long-run supply curve of an industry that buys a large fraction of the output of an increasing cost industry tends to be

Determine whether the following statements are TRUE OR FALSE.

Statement 1: Competitive firms can still earn positive accounting profits in the long run.

Statement 2: A higher total cost to a firm must imply a lower level of output.

Determine whether the following statements about a perfectly competitive market are TRUE OR FALSE.

Statement 1: The demand curve facing the market is horizontal.

Statement 2: Entry of new firms will drive the accounting profits of the existing firms to zero in the long run.

Which of the following is/are the condition(s) for a firm to shut down in the short run?

Suppose a Hong Kong factory employs 4 units of machines at a daily rent of $50. The output of machines is determined by the number of workers hired. The table below shows the average daily output the factory can produce when different number of workers are hired per day. It is known that the daily wage of hiring a worker is $350 and the price of each unit of output is $9. 

(IV) national defense, a lighthouse, smog reduction

(I) Justin, a professor in Hong Kong, pays his property taxes and incomes taxes. The taxes are used to finance the police patrol in his neighborhood.

(II) Scott, a teenager in Taipei, jumps on board the train without paying.

(III) Daniel, a tourist from Spain, enjoys the public parks in China.

Which of the following is most likely to be identified as a public good?