Refer to the graph shown. If this firm is maximizing profit, it will:
A. earn just normal profits, that is, zero economic profits.
B. earn economic profits.
C. make enough to cover its variable costs but not its fixed costs.
D. incur a loss.
Answer: B
You might also like to view...
Which of the following about unemployment is true?
a. The unemployment rates of the major European economies have been lower than the United States during the last decade. b. The natural rate of unemployment is unaffected by labor market regulations and other dimensions of public policy. c. High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. d. The unemployment rates of Spain and Italy were among the lowest in the world during the past two decades.
Which of the following is a major deficiency of fiscal policy as a stabilization tool?
a. Congress is reluctant to make changes in either taxes or expenditures. b. The Constitution requires the president to submit and Congress to pass a balanced budget. c. Both political and economic factors make it unlikely that changes in fiscal policy will be timed correctly. d. A change in fiscal policy exerts major effects on the economy quickly.
If the economy were at full employment and is producing at point Y,
A. the unemployment rate would increase.
B. the unemployment rate would decrease.
C. the production possibilities frontier would have shifted inward.
D. the production possibilities frontier would have shifted outward.
Which of the following statements is true?
A. Many different production processes can be technically efficient, but only the method that involves the lowest possible cost is economically efficient. B. Many different production processes can be economically efficient, but only the method that involves the lowest possible cost is technically efficient. C. There are many production processes that are both technically and economically efficient, but only one of these involves the lowest possible cost. D. There is only one production process that is technically efficient, and this process is also economically efficient.