A compensating differential is a difference in wages due to higher levels of education or other forms of human capital
a. True
b. False
Indicate whether the statement is true or false
False
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If consumers are loyal to the products of an existing firm, this loyalty may
a. reduce the incentives for the firm to invest b. result in more responsive management and better quality products c. reduce the demand for imported goods d. serve as a barrier to new entry into the market e. force the firm to produce at higher costs
A perfectly competitive industry in long-run equilibrium is described as efficient because firms
a. produce at the low point on their average cost curve. b. produce where marginal cost yields a profit. c. earn no more than the cost of capital. d. are not profitable.
To maximize profits, a perfectly competitive firm should produce until:
A. average total cost is minimized. B. marginal cost is equal to price. C. per unit profits are maximized. D. price is greater than average total cost.
The crowding-out effect refers to:
A. higher interest rates and reduced private spending that results from financing federal budget deficits. B. higher future taxes accompanying budget deficits to reduce private consumption. C. the inflation rate to rise when the unemployment rate is low. D. increases in private savings to reduce interest rates and, thereby, crowd-out government