The owners of sports franchises often complain that free-agency (open bidding for player services) threatens their profitability and thus their long-run viability. Given your knowledge of perfect competition, which of the following is correct?
A) Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players equal zero.
B) Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players is negative.
C) Team owners are lying, as free-agent salaries are still much too low.
D) Team owners are telling the truth, as free-agent salaries are much too high.
A
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The statement "There is no accounting for taste" implies
A) individuals all have the same preferences. B) individuals all have different cardinal preferences but the same ordinal preferences. C) individuals all have different ordinal preferences but the same cardinal preferences. D) individuals all have different ordinal and cardinal preferences.
Economic models are NOT used to
A) explain economic phenomena. B) predict economic phenomena. C) understand economic phenomena. D) describe all economic phenomena in minute detail.
A firm earning economic losses should operate in the short run as long as
A) the price per unit sold is greater than the average fixed cost per unit produced. B) the price per unit sold is greater than the average variable cost per unit produced. C) marginal revenue is at least the price per unit sold. D) the price per unit sold is equal to or greater than the marginal cost of production.
If all firms in a monopolistically competitive market are incurring losses, then eventually:
a. the demand for the products in the market will increase. b. the supply of the products in the market will increase. c. the price of the products in general will decline. d. the cost of production will increase. e. the firms will exit until the existing ones just break even.