Why does a monopolistic competitor earn zero economic profits in the long run?
What will be an ideal response?
Answer: Because firms will enter or exit all the firms are breaking even, and no new firm wants to enter the market for the positive economic profits there.
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The tax wedge is the difference between the
A) amount of taxes needed to pay off the national debt and the actual amount of taxes. B) nominal and real interest rates. C) pretax and posttax returns to an economic activity. D) amount of taxes needed to balance the federal budget and the actual amount of taxes.
Which of the following best explains an economic criticism of unregulated monopolists?
a. Monopolists do not try to minimize their costs of production. b. Monopolists produce where marginal revenue is greater than marginal costs. c. Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. d. Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them.
If income is rising faster in Japan than in the United States, there will be an increase in the demand for the yen and a decrease in the demand for the dollar.
Answer the following statement true (T) or false (F)
Diseconomies of scale occur when
A) long-run average costs rise as a firm increases its output. B) long-run average costs fall as a firm expands its plant size. C) short-run average costs rise as a firm expands its plant size. D) long-run labor costs rise as a firm increases its output.