The assumption that firms attempt to maximize profits will yield good predictions even if firms sometimes pursue other goals.
Answer the following statement true (T) or false (F)
True
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At the economy's natural rate of unemployment
A. only frictional unemployment exists. B. there is only a relatively small amount of cyclical unemployment. C. only structural unemployment exists. D. the economy is fully employed.
An individual firm is insolvent when ________
A) its assets exceed the value of its liabilities B) its average costs per unit are greater than its marginal cost C) its average costs per unit are less than its marginal cost D) its liabilities exceed the value of its assets
Use the following graph to answer the next question.
The year 2000 must be the ________.
A. year when depreciation or capital consumption equaled zero B. year when GDP equaled 100 C. base year of the GDP price index D. year when the GDP price index is zero
Which of the following could be evidence of a market failure?
A) Resources in an economy are not fully utilized. B) The market price of a product is above the average cost of production. C) There are only a handful of firms competing against each other in an industry. D) Market prices do not reflect true production costs.