Respond to the following: "If it takes a significant period of time to uncover accounting manipulations by individuals in a major corporation, honesty may be the best policy but dishonesty can be a lot more profitable!"
What will be an ideal response?
As we saw in 2001 and 2002, as a result of accounting fraud at Enron and other firms, many corporate executives profited heavily from the manipulation of the financial statements. For example, managers who may have been given stock options, ironically to avoid the moral hazard problem, have the incentive to manipulate the statements, watch the stock price rise as a result of the incorrect figures, profit from their options and then correct the statements.
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Use the following graph to answer the next question.
If the industry operates as a pure monopoly, the profit-maximizing quantity of output would be ________.
A. a level that is not labeled in the graph B. 195 C. 160 D. 90
A firm in a monopolistically competitive market makes no economic profit in the long run because
A. long-run marginal cost will be too high to make any economic profit. B. long-run price will be equal to long-run marginal cost. C. long-run marginal cost will be equal to long-run marginal revenue. D. long-run price will be equal to long-run average cost.
The table above gives the demand schedule for snow peas. If the price of snow peas falls from $4.00 to $3.00 a bushel, total revenue will
A) increase because demand is elastic in this range. B) decrease because demand is elastic in this range. C) increase because demand is inelastic in this range. D) decrease because demand is inelastic in this range.
Suppose that the production function for an economy is graphed with Real GDP on the vertical axis and labor on the horizontal axis. When the level of capital in this economy rises, it causes ____________________which shifts the LRAS curve ____________ resulting in ______________________
A) a movement down along a given production function; leftward; a shrinking economy B) the production function to shift downward; leftward; a shrinking economy C) a movement up along a given production function; rightward; economic growth D) the production function to shift upward; rightward; economic growth