A normal profit is:
A. the average profitability of a firm over one complete business cycle.
B. calculated by subtracting explicit costs from total revenue.
C. the "price" required to retain entrepreneurial talent in some particular line of production.
D. the amount by which total revenue exceeds total operating costs.
Answer: C
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According to the expenditure approach, the largest component of GDP is:
a. government spending. b. proprietor's income. c. net interest. d. personal consumption expenditures. e. compensation of employees.
U.S. goods will become relatively less expensive than goods from other countries if prices were to:
A. increase in the United States only. B. decrease in the United States only. C. increase in the United States and foreign countries at the same rate. D. decrease in the United States and foreign countries at the same rate.
Hamburger is an inferior good. If the price of hamburger increases,
a. the income effect on the demand for hamburger will reinforce the substitution effect b. the income effect on the supply of hamburger will reinforce the substitution effect c. the budget line will rotate outward d. the budget line will shift outwards e. the income effect on the demand for hamburger will offset, to some degree, the substitution effect
Old Navy has a discount store in a rundown neighborhood and charges about half what they charge for the same merchandise in a more fashionable neighborhood. The best explanation for why they charge less in the rundown neighborhood is that
A. they pay less rent. B. their customers can't afford to pay any more. C. they don't have to bother advertising. D. they are maximizing their profits at the prices they are charging.