A firm that is earning a positive profit in the short run and expects to continue doing so has an incentive to expand its scale of operation in the long run.
Answer the following statement true (T) or false (F)
True
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According to the data on real U.S. GDP,
A. economic growth has been irregular, with some periods of downturns. B. economic growth has been consistent, but with a few downturns. C. economic growth has been extremely rapid, but also includes major collapses. D. economic growth has been slight, but downturns have also been eliminated.
The present value of receiving M dollars two years from now when the prevailing interest rate is i is equal to
a. M - i2 b. M ? i2 c. M/i d. M/(1 - i) e. M/(1 + i)2
If a firm in a competitive price-searcher market finds that its marginal revenue exceeds its marginal cost at the current rate of output, it should
a. raise the price of the product and expand its output. b. raise the price of the product and reduce its output. c. lower the price of the product and expand its output. d. lower the price of the product and reduce its output.
Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b). An increase in demand from D0 to D1 will result in
a. A new market equilibrium at point X
b. An eventual increase in the number of firms in the market and a new long-run equilibrium at point Z
c. Rising prices and falling profits for existing firms in the market
d. Falling prices and falling profit for existing firms in the market