Entrepreneurs in purely competitive industries:
A. have no incentive to innovate because in the long run they will earn no economic profits.
B. innovate to lower operating costs and generate short-run economic profits.
C. utilize pricing strategies to generate short-run economic profits.
D. rarely try to innovate because of a lack of financial resources.
Answer: B
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Assume the firms in a monopolistically competitive market are currently incurring economic losses
Because they are price searchers, existing firms will raise their prices until the losses are eliminated and each firm is once again earning zero economic profit. Indicate whether the statement is true or false
What's the firm's contribution margin?
a. $1800 b. $800 c. $1000 d. $300
The "crowding-out" effect refers to the fact that
A) fiscal policy cannot be used to shift the IS curve.
B) rising interest rates tend to accompany an expansionary fiscal policy.
C) there may be a liquidity trap.
D) All of these.
The unreported or illegal production of goods and services in the economy that is not counted in GDP is called
a. money laundering b. the underground economy c. net personal disposable income d. indirect national income e. unreported capital consumption