1. Apartments in New York City are subject to rent control. Apartment owners there often require tenants to purchase their furniture from them. Why?
2. In the long run, a firm could always produce twice as much simply by doubling the amount of every input employed. So in the long run there must be constant returns to scale." Evaluate.
3. In a competitive industry, for any firm there may be internal economies of scale over a certain range. But each firm must operate in the region where internal diseconomies of scale dominate." True or false? Explain.
4. Under what circumstances would you expect a rise in demand for an industry's product to be met primarily by a short-run output response by existing firms? By a long-run response by existing firms? By entry of new firms?