If a firm cannot earn profits in the short run, it will shut down
Indicate whether the statement is true or false
False. A firm will operate at a loss if the loss incurred from production is less than the loss incurred from shutting down. Even if the firm shuts down, it still must pay its fixed costs because, in the short-run, going out of business is not an option.
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Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Expected water consumption is:
A. 33.25 units of water. B. 61 units of water. C. 30.5 units of water. D. 27 units of water.
The observed change in the reserves of copper, lead, and zinc between 1960 and 1990 was most likely caused by
a. low prices discouraging exploration for new reserves. b. a slowdown in demand growth. c. high prices that stimulated exploration. d. the discovery of substitutes.
The nominal tax rate is
A. Taxes paid divided by total economic income. B. Equal to the marginal tax rate. C. Taxes paid divided by taxable income. D. Lower than the effective tax rate.
There is general agreement among economists that a proposed fiscal policy should be evaluated for its:
A. potential positive and negative effects on long-run productivity growth. B. contribution to the purpose of "fine-tuning" the economy. C. contribution to the growth of exports and imports in the economy. D. potential positive and negative effects on short-run business indebtedness.