Firms that are "breaking even" are
A. shutting down in the short run.
B. earning less than a normal rate of return.
C. earning zero economic profits.
D. All of the above are correct.
Answer: C
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If investment increases by $100, then the aggregate expenditure model concludes that equilibrium expenditure
A) increases by $100. B) increases by less than $100. C) decreases by $100. D) remains unchanged. E) increases by more than $100.
Assume the capital-labor ratio remains constant. If investment increases at a constant rate, real GDP per worker will increase ________, and if total factor productivity increases at a constant rate, real GDP per worker will increase ________
A) at an increasing rate; at an increasing rate B) at a constant rate; at an increasing rate C) at a constant rate; at a decreasing rate D) at a decreasing rate; at a constant rate
An immediate depreciation allowance is referred to as ________ and it ________ the tax shield.
A) expensing the investment; increases B) straight-line depreciation; decreases C) straight-line depreciation; increases D) expensing the investment; decreases
When a factory is operating in the short run,
a. it cannot alter variable costs. b. total cost and variable cost are usually the same. c. average fixed cost rises as output increases. d. it cannot adjust the quantity of fixed inputs.